LONDON, June 25 (Reuters): The dollar drifted lower in Europe on Friday as an agreement on U.S. infrastructure spending underpinned appetite for riskier currencies, but caution ahead of key U.S. inflation data kept losses to a minimum.
The risk-sensitive Antipodean currencies rose, as did the euro, gaining 0.1% to $1.1943, and the Japanese yen , which rose by about the same margin to 110.77 per dollar.
Such small moves left most of the dollar's recent gains intact, after it was vaulted higher in the wake of a surprise shift in policy outlook from the Federal Reserve - which last week flagged sooner-than-expected interest rate rises.
Inflation data on Friday will offer the latest indication of how much pressure the Fed is under to move, as will labour market figures due in a week's time - leaving traders unwilling to sell the dollar too hard just in case it bounces again soon.
Economists polled by Reuters expect the core personal consumption expenditures index to post its fastest rise in nearly three decades, with year-on-year gains of 3.4%. The data is due at 1230 GMT.
"...The consensus is already expecting quite a large increase in the May PCE inflation data - looking for 3.9% YoY headline and 3.4% YoY core," said strategists at ING in a note to clients.
"The bar may therefore be high for a nasty surprise and one that might push the Fed into early tapering and tightening. Barring a surprise on the PCE inflation, we would say the dollar index continues to consolidate - perhaps drifting back towards the 91.50 area."
A combination of soothing comments on Thursday from New York Federal Reserve Bank President John Williams and hopes for a huge U.S. infrastructure spending plan supported the mood in financial markets, helping riskier currencies.
The New Zealand dollar has crept back above its 200-day moving average to $0.7076, although it remains well shy of February highs above 74 cents. The Australian dollar rose 0.2% to $0.7595.
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