FOREX-Dollar falls broadly, yen up as risk appetite fades

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By Simon Falush

LONDON, May 9 (Reuters) - The dollar fell broadly on Friday as sagging stock markets and a jump in oil prices to a record high weighed on the U.S. currency, while fading risk demand boosted the low-yielding yen.

The euro added to gains made the previous session after ECB President Jean-Claude Trichet said on Thursday that inflation remained his top concern, suggesting the bank may not cut interest rates soon. [ID:nL08596967]

The euro recovered after falling to a two-month trough below $1.53 as some investors expected Trichet to temper his tough talk on inflation and focus on signs of slowing euro zone growth.

"It's fair to say that speculation that the ECB would deliver a softer stance was why the euro dipped to $1.53, and it recovered as (these expectations) were disappointed," said Niels Christensen, FX strategist at Nordea.

However the euro was still over 4 percent off its record high versus the dollar set in April as a series of soft data keeps the single currency on the back foot.

"We've had a week without much U.S. news and the focus has been on European numbers, I don't think people are convinced about (where euro/dollar) is going until we get some fresh information from the U.S.," Christensen said.

By 0805 GMT the dollar was down 0.5 percent against a basket of currencies at 73.217 .DXY.   Continued...