The dollar fought back from early losses versus the euro on Friday, as Germany and France argued over whether the European Central Bank should be the lender of last resort for their debt-ridden neighbors.
In a speech in Frankfurt, German Chancellor Angela Merkel said the ECB should not intervene forcefully to end the sovereign debt crisis that threatens to engulf Italy.
France, facing rising borrowing costs, wants to have the ECB backstop distressed sovereign debt.
However, the ECB has decided to limit the amount of sovereign debt purchases at around EUR 20 billion per week, the German newspaper Frankfurter Allgemeine Zeitung reported Friday without mentioning the source.
The ECB may be looking for ways to use the International Monetary Fund as a middle man to monetize sovereign debt.
Traders were cautious ahead of a key vote in Spanish parliament this weekend.
The dollar rebounded to $1.35 versus the euro, after touching $1.36 in early dealing. Earlier this week, the dollar touched a monthly peak of $1.3411.
The buck recouped some of its early losses versus the yen, steadying near Y77 after dropping to Y76.60.
The dollar was stable near C$1.0250 versus the loonie, after the release of Canadian inflation figures.
Canadian consumer prices eased in October, as the nation’s annual rate of inflation dropped to 2.9 percent from 3.2 percent in September, official data showed Friday.
In economic news from the U.S., leading economic indicators showed a notable improvement in the month of October, according to a report released by the Conference Board on Friday, with the leading indicators index rising by more than anticipated.
The Conference Board said its leading economic index rose by 0.9 percent in October following a revised 0.1 percent increase in September. Economists had expected the index to rise by about 0.5 percent compared to the 0.2 percent increase originally reported for the previous month.