By Jemima Kelly
LONDON (Reuters) - The dollar edged up on Friday and was on track for its strongest week in seven with an almost 1 percent rise, benefiting from a weaker euro as solid U.S. economic data has contrasted with cooling euro zone inflation.
Over the quarter, though, the greenback has fallen 1.7 percent (DXY) against a basket of major currencies, its worst showing in a year, on doubts that U.S. President Donald Trump was not prioritizing - and did not have the necessary power - to push through Congress the economic reforms that had driven the dollar to 14-year highs at the start of the year.
It was up 0.1 percent at 100.46 on Friday, 3 percent down from January's peak.
Revised U.S. gross domestic product data on Thursday showed that U.S. fourth quarter growth slowed less than previously reported as consumer spending provided a boost that was partially offset by the largest gain in imports in two years.
In contrast, German and Spanish consumer price data disappointed on Thursday, showing inflation slowed more sharply than expected in March as oil prices slumped, offering some respite to the European Central Bank as it faces pressure to wind down its monetary stimulus.
The weaker inflation numbers, along with comments from ECB officials and sources suggesting that the market had moved too far in pricing in monetary tightening, have weighed on the euro, which has fallen almost 2 percent in the past four days. On Friday it edged up 0.2 percent to $1.0694
"The combination of inflation disappointments as well as a consistent press of ECB rhetoric on market pricing has shifted people out of this very short term but long euro view," said Citi's head of FX strategy in London, Richard Cochinos.
"We also have the French elections at the end of the month, so I think it’s going to be difficult for the market to go and buy a bunch of euros until we get through that."
Inflation data for the euro zone as a whole was due at 0900 GMT
Later on Friday, Trump will sign executive orders aimed at identifying abuses that are causing massive U.S. trade deficits and clamping down on non-payment of anti-dumping and anti-subsidy duties on imports, according to his top trade officials.
Commerce Secretary Wilbur Ross told reporters that one of the orders directs his department and the U.S. Trade Representative to conduct a major review of the causes of U.S. trade deficits, including "currency misalignment".
While the foreign exchange market's reaction to the news was muted, market participants were warily watching for developments.
"From a risk-management perspective, it's definitely something on the radar," said Bart Wakabayashi, branch manager for State Street Bank and Trust in Tokyo.
The dollar rallied 1.3 percent against South Africa's rand to 13.470 <ZAR=>, its highest since early February, after President Jacob Zuma sacked finance minister Pravin Gordhan in a cabinet reshuffle following days of speculation that has rocked the country's markets and currency.
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