* Dollar index hovers near 2-1/2-week lows
* Emerging market currencies supported after Turkey's big hike
* Yuan, Aussie await China data for near-term cues
* Graphic: World FX rates in 2018
By Shinichi Saoshiro
TOKYO, Sept 14 (Reuters) - The dollar sagged on Friday after
weaker-than-expected U.S. inflation data further burdened a currency
already weighed down by signs of reduced trade tensions between the
United States and China.
Emerging currencies such as the South African rand and the Mexican
peso held to gains after surging in relief after Turkey's central bank
implemented a large increase in interest rates.
The greenback took a hit overnight after the U.S. consumer price
index (CPI), the government's broadest inflation gauge, rose just 0.2
percent in August and less than the 0.3 percent projected by analysts
in a Reuters poll.
The dollar also felt additional pressure as the euro gained after
European Central Bank President Mario Draghi suggested on Thursday at
a post-policy meeting news conference that low inflation was less of a
"The dollar has sagged mainly due to the soft U.S. CPI. The
euro's bounce also weighed on the dollar, but Draghi's views cannot be
described as hawkish on the whole. There appears to have been some
knee-jerk reaction to his comments on inflation," said Masafumi
Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.
The ECB kept policy unchanged as expected on Thursday, staying on
track to end its bond purchases this year and raise interest rates
The dollar's index against a basket of six major currencies stood
little changed at 94.563 after slipping 0.3 percent on Thursday,
when it touched 94.428, its lowest since Aug. 31.
Safe-haven demand for the dollar eased this week on news that the
White House had invited Chinese officials to restart trade talks.
Beijing welcomed the invitation with the two countries now reported to
be discussing the details.
The euro was steady at $1.1691 after gaining more than 0.5
percent overnight when it brushed a two-week high of $1.1701.
The Turkish lira was a shade weaker at 6.137 per dollar
after ending the previous day on a gain of more than 4 percent.
The lira surged after Turkey's central bank raised its benchmark
one-week repo rate by 625 basis points to 24 percent on Thursday.
Following the lira's rally, the South African rand gained 1.3
percent against the dollar on Thursday and the Mexican peso rose 1 percent.
China's yuan stood little changed at 6.8452 in offshore trade.
The yuan has gained nearly 0.4 percent on the week amid the ebb in
U.S.-China trade concerns.
The Australian dollar, seen as a proxy of China-related trades as
well as a barometer of risk sentiment, was flat at $0.7191 .
The Aussie was headed for a 1.1 percent gain on the week, having
pulled back from a 2-1/2-year low of $0.7085 plumbed on Tuesday.
For the yuan and Aussie, immediate focus was on China's retail
sales and industrial production data due later in the session.
The dollar was up 0.1 percent at 112.03 yen after rising to
112.08 yen, its highest since Aug. 1, with rising equities dimming the
Japanese currency's safe-have allure.
(Reporting by Shinichi Saoshiro Editing by Eric Meijer)
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