Afternoon Forex Overview

The U.S. dollar slipped versus the Japanese yen and was little changed versus the euro Friday after the government said its consumer price index was unchanged in July, as analysts expected and easing concerns about inflation.The dollar bought JPY94.86, down from JPY95.32 in North American trade late Thursday.Japan's currency had been advancing throughout the session, though, garnering support on its safe-haven status.Among the three most traded currencies - yen, euro and dollar - the yen is seen as the safest bet now.Recovery in the U.S. appears under question as the dollar again nears its lowest levels of 2009 versus the euro. The July U.S. retail sales report disappointed Thursday, and could drive economists to revise third quarter U.S. gross domestic products lower.U.S. consumer prices fell last month at their fastest annual pace since 1950, an indication that inflation isn't a threat to the economy or the Federal Reserve - likely to keep U.S. interest rates and the yield on the dollar low.Market expectationEURUSD ebbing lower as euro-yen provides weight and as pair tracks cable lower, US stock futures easing lower and perhaps offering some risk-related pressure as well. Backdrop of chatter of upbeat US IP data ahead perhaps also giving the greenback a boost here, though traders struggling to nail down good correlations in this market. Euro holding marginally above the overnight low at USD1.4253, talk of bids around USD1.4245.Pound slowly squeezing lower extends correction away from pre CPI release recovery highs at USD1.6606 to USD1.6578 at writing. As mentioned earlier next support noted at USD1.6560, a break here may open a deeper move toward USD1.6545/40 with stops below.EURGBP extends corrective pullback through support at stg0.8600, the rate posting fresh intraday lows at stg0.8594 but seen meeting support from reported demand placed between stg0.8595/90. A break here may open a deeper move toward stg0.8585/80. Move seen as sterling picks up decent demand interest and cable edging back above USD1.6600.The yen may also be recovering from recent losses after the Democratic Party of Japan's signaled earlier this week it might tolerate a rising yen if it wins in an election this month, reflecting a view that a strong currency might eventually benefit the ailing economy.