The yen hit a seven-week low against the euro on Friday but quickly recovered after a softer-than-expected rise in consumer prices did nothing to shake expectations the Bank of Japan could raise interest rates by the third quarter. The core consumer price index climbed 0.5 percent from a year earlier in February, falling short of market expectations for a 0.6 percent rise. Currency moves were erratic, with dealers saying the market was also disrupted by last-minute orders, both bids and offers, from Japanese companies as the financial year winds down on Friday. "Trade is very choppy because of speculation about commercial demand related to the financial year end," said a trader at a Japanese bank. Other data released on Friday pointed to improving labour market conditions in Japan. Unemployment fell to an eight-year low of 4.1 percent in February, well below the previous month's reading of 4.5 percent and the biggest month-on-month drop on record. Traders said the data boosted the case for an early rate hike in Japan as a tight jobs market tends to inflate wages and prices. "I'd say the yen would rise given this data on a normal day. But the year-end factor makes it difficult to predict where the market is going today," said another dealer at a European bank. The dollar rose to around 117.50 yen immediately after the CPI landed and later climbed to 117.65 yen before erasing the gains. As of 0245 GMT, it stood at 117.45 yen up from around 117.30 yen in late New York trade on Thursday. The euro rose to 142.97 yen, according to Reuters data, its highest level since Feb. 6. It was around 142.75 yen in late U.S. trade. The euro was little changed against the dollar at $1.2165. On Thursday, the single European currency posted its biggest one-day gain in two months, rising about 1.2 percent. The euro's rise was driven by a barrage of speculation, including rehashed talk of more euro buying due to reserve diversification by the United Arab Emirates and rumours that the White House had issued a statement in support of a weaker dollar. The Treasury Department subsequently reaffirmed its usual public stance that a "strong dollar", the value of which is set in open markets, is in the national interest. Traders said the dollar was also bruised by a report in The New York Times that Joshua Bolten, U.S. President George W. Bush's incoming chief of staff, wanted Treasury Secretary John Snow to be replaced.