Forex - EUR/USD flat to higher on soft U.S. factory, inflation data

FTS - Forex Trading:- The euro brushed off weak eurozone growth data and rose against the greenback in Asian trading on Friday after a wave of disappointing output, inflation and other reports hit the wire one after the other in the U.S. on Thursday.

The numbers convinced investors that the Federal Reserve will go slow when it decides to scale back stimulus measures.

Monetary stimulus tools, such as low interest rates, dovish language and the Fed's monthly USD85 billion asset-purchasing program, weaken the dollar to spur recovery.

In Asian trading on Friday, EUR/USD was up 0.03% at 1.2882, up from a session low of 1.2878 and off from a high of 1.2890.

The pair was likely to find support at 1.2844, Wednesday's low, and resistance at 1.3029, Tuesday's high.

In the U.S. earlier, the Federal Reserve Bank of Philadelphia reported that its manufacturing index fell to -5.2 in May from 1.3 in April. 

Analysts were expecting the index to improve to a reading of 2.4 in May, which fueled sentiments that loose policies at the Federal Reserve aren't going to wind down anytime soon as did disappointing numbers out of the labor market. 

The U.S. Department of Labor reported Thursday that the number of individuals filing for initial unemployment assistance in the U.S. rose by 32,000 to 360,000 last week, well above expectations for an increase of 2,000 to 330,000.

Soft inflation data took the steam out of the dollar as well.

The country's consumer price index fell 0.4% in April from March, worse than expectations for a 0.2% decline, down for the second consecutive month.

Year-on-year inflation rates in the U.S. came to 1.1%, just shy of market expectations for a 1.3% reading and well below the Federal Reserve's 2% target.

Conflicting data out of the housing industry dampened the dollar as well.

The Commerce Department said the number of building permits issued in the U.S. rose 14.3% to 1.017 million units in April, well above expectations for a 6.2% increase to 945,000 units.

U.S. housing starts, however, fell by 16.5% last month to 853,000 units, outpacing expectations for a decline of 4.9% to 973,000.

Thursday's data came in wake of soft industrial output and producer-price reports released on Wednesday.

The dollar saw some support on hawkish comments from Federal Reserve officials earlier.

Federal Reserve Bank of San Francisco President John Williams suggested earlier that despite hit-or-miss economic indicators, monetary authorities may begin to scale back the program later this year.

Philadelphia Fed President Charles Plosser, a known inflation hawk, added separately that the Fed should consider scaling back the program next month.

Still, the dollar remained weak against the single currency on sentiments that policy shifts will come very gradually in the U.S.

In Europe, meanwhile, the eurozone said its consumer price index rose 1.2% on year in April, in line with expectations.

A separate report revealed that the eurozone posted a record trade surplus in March as imports fell 1% from February, while exports grew 2.8%.

The euro, meanwhile, was down against the pound and down against the yen, with EUR/GBP trading down 0.02% at 0.8434, and EUR/JPYtrading down 0.13% at 131.57.