Dollar on Pause Versus Majors ahead of Consumer Spending, Chicago PMI, Friday, May 30, 2008 7:01:35 AM

The dollar leveled off against the euro and yen while extending a run of choppy trading versus the sterling as traders looked ahead to a slew of economic results from the US, including a key reading on personal consumption.

Traders will be treated to the Commerce Department`s report on personal income and spending for the latest on the mindset of the consumer. Other economic reports to consider include the Chicago PMI manufacturing survey and a revised reading on consumer sentiment from the University of Michigan.

The dollar pulled back a bit after hitting a 2-week high against the euro overnight, slipping to 1.5517 from 1.5461. The dollar has spiked higher against the euro this week amid speculation that creeping economic weakness in the eurozone will lead to a rate cut from the European Central Bank.

On Friday, the Federal Statistics Office reported that German retail sales fell 1.7% in April month-over-month. Economists had expected a 0.6% rise following the previous month`s 2.2% decline.

Euro zone annual inflation grew 3.6% in May, according to preliminary estimates from Eurostat. Economists had expected a reading of 3.5%, up from April`s 3.3% growth rate.

The dollar stretched to a fresh 3-month high of 105.85 versus the yen overnight, but eased slightly from there to trade at 105.40 approaching mid-morning. Japanese housing starts declined 8.7% year-on-year in April to 97,930 units, official data revealed Friday. This is smaller than the 15.6% fall in March. Economists were looking for an 11.8% slump in April housing starts.

Orders with Japan`s big 50 contractors dropped 8.4% year-on-year in April, while economists had forecasted a 16% fall. In March, construction orders were down 6.4%.

The dollar was little changed in choppy dealing against the sterling Friday morning, staying in a range between 1.97 and 1.98 through 7 am ET. The dollar has been moving roughly sideways versus the sterling this week, stabilizing from a multi-week low of 1.9850.

The dollar recovered most of its losses from the previous session versus the loonie, rising back to .99 from yesterday`s low near .9820. Even with the price of oil pulling back sharply from its record highs this week, the dollar has been unable to break above the parity line versus its Canadian counterpart.