The dollar edged lower on Friday ahead of data on the producer prices, New York state manufacturing and consumer confidence. The dollar was last down 0.04% vs. the euro, with one euro worth $1.2090, and down 0.39% against the yen, with one dollar worth 111.91 yen. A Financial Times report saying the Bush administration is expecting a revaluation of China's yuan in August helped the yen. "Positions appear very light to us and markets are re-engaged in looking for a theme," said analysts from Barclays Capital. Economists polled by MarketWatch are expecting PPI to rise 0.4% in June, an 11.6 reading of the Empire State manufacturing index and for July consumer sentiment to fall to 95.1 from 96.0. Other economist surveys see the Empire State index falling to 9.6 from 11.7 last month. On Thursday, a benign CPI and higher-than-expected initial jobless claims dented the dollar's upside move, while the market reaction to the stronger-than-expected retail sales number was largely muted, analysts said. Wall Street economists surveyed by MarketWatch forecast both the consumer price index and the core CPI to rise 0.2%. Analysts said the unexpectedly tame retail-level inflation report damped hopes that the Federal Reserve would keep raising interest rates at a brisk clip -- tightening that would increase demand for the U.S. currency. "What it [CPI] tells us is that right now, the 4% rate theory is really put into question," said Kathy Lien, chief fundamental analyst at Forex Capital Markets. With skyrocketing oil prices, high jobless claims, and very soft inflation number, "the Fed could very well stop at 3.75%," she said. The momentum was further fueled by revised budget forecasts from the White House, projecting a narrower federal shortfall than previously expected. But some currency analysts noted the deficit shrank primarily because of the temporary stability seen in oil prices during the April-May period and consequently a drop in oil imports. "Even though the data we had for the month of May was fairly good, it's probably nothing more than a one month anomaly," said Lien.