By Josie Cox
The euro and the British pound tumbled against the dollar
Friday, after data showed that U.S. consumer prices rose for the
third straight month in April, sending the buck sharply higher.
By late afternoon in Europe, the bloc's single currency was 0.7%
lower at $1.1034, having earlier in the session risen to just above
$1.12.
The pound fell more than 1% against the buck to $1.5501.
Early euro buying against the dollar Friday had been inspired by
recent weaker U.S. data, but later in the day that move
reversed.
"Markets are incredibly volatile at the moment and any U.S. data
is being watched incredibly closely," said Jane Foley, a senior
strategist at Rabobank in London.
Friday's data, she said, had "reignited the debate" around a
U.S. Federal Reserve interest rate raise this year.
Much of the economic data this week drove many investors to push
back expectations for Fed action until next year, Ms. Foley said.
"But Friday's figures might encourage some reconsideration."
A strong U.S. economy is likely to encourage the Fed to raise
interest rates sooner, which would make the dollar more attractive
to yield-hungry investors.
European equities ended a quiet session little changed, having
swung between small losses and gains.
Germany's DAX lost 0.4% after the Ifo measure of business
confidence weakened for the first time in seven months in May,
while separate data showed that German domestic demand had
propelled the economy in the first quarter of the year.
The U.K.'s FTSE 100 advanced 0.3%.
Brent crude was around 1.4% lower on the day at $65.58 a barrel,
while gold was up 0.1% at $1,205.10 a troy ounce.
Looking ahead, the Greek government appeared optimistic that it
would be able to a reach a deal with its international creditors in
the coming days, after Greek Prime Minister Alexis Tsipras met with
his German and French counterparts and the head of the European
Commission.
Tommy Stubbington contributed to this article.
Write to Josie Cox at josie.cox@wsj.com