A showdown in Europe over an extended aid deal for Greece weighed on the euro and lifted the dollar.
In late trading Friday in New York, the euro tumbled to $1.4355 from $1.4509 Thursday. The British pound dropped to $1.6239 from $1.6369. The dollar rose to 80.32 Japanese yen from 80.26 Japanese yen.
European officials are publicly contradicting each other on terms for a new emergency loan package for Greece. That's unnerved investors who had expected that the Europeans were on the verge of agreeing on a new deal, said Ron Leven, a Morgan Stanley currency analyst. Many investors expect Greece to run out of money next year without a new aid deal on top of the 110 billion euros in rescue loans already agreed to last year.
"The Germans are starting to balk," Leven said. Germany is Europe's largest economy and a powerful voice in the euro bloc.
German lawmakers on Friday said that they supported the German finance minister's demand that private creditors should share the burden of any new Greek emergency loan deal. But the European Central Bank has opposed such measures because it would suggest the nation was in default, and potentially deepen the continent's debt crisis.
The disagreement between the Germans and Europe's central bankers puts the deal in jeopardy less than two weeks before a crucial meeting where European leaders were to decide what to do about Greece. The nation is at risk of losing the support of the International Monetary Fund, said Brown Brothers Harriman analysts. The IMF is one of the major lenders to Greece.
In other trading Friday, the dollar was unchanged at 0.8421 Swiss franc, and strengthened to 97.67 Canadian cents from 97.38 Canadian cents.