Dollar holds steady on safe

By Laura Matthews NEW YORK, July 17 (Reuters) - The dollar was flat on Friday, but ended the week lower as tame U.S. inflation data led traders to cut bets on imminent rate hikes from the Federal Reserve. Iran and the United States exchanged intensifying fire in a week-long escalation that has largely unravelled last month's truce, spurring safe-haven bids for the dollar and pushing oil prices to near one-month highs. "The tech-led global equity market plunge and ongoing disruption to Strait of Hormuz traffic have triggered a flight to safety," said Elias Haddad, global head of markets strategy at Brown Brothers Harriman. "USD recovered some of this week's losses, and global bond yields edged a bit lower." The dollar index <= USD>, which measures the U.S. currency against six other units, was at 100.76, set for a weekly drop of 0.2%. The index hit a one-month low earlier this week on easing chances of a near-term rate hike but safe-haven flows have helped support the greenback. The euro remained flat at $1.1436, putting it at a 0.2% rise in the week. Sterling fell 0.2% to $1.3455, but posted its third straight week of gains following UK economic growth figures and expectations for greater political certainty with incoming Prime Minister Andy Burnham reportedly set to pick a centrist finance minister. The Australian dollar ended with a third week of gains, although it was 0.23% softer on the day at $0.6980 as risk-off sentiment prevailed, with global stocks falling on Friday. U.S. consumer sentiment climbed to a five-month high in July, although traders said the respite may prove temporary with renewed conflict in the Middle East driving up gasoline prices. THE RISK OF INTERVENTION The Japanese yen was flat, fetching 162.44 per U.S. dollar, remaining rooted near the 40-year low of 162.84 it touched at the start of the month. Traders remained wary of official intervention from Tokyo after Japanese Finance Minister Satsuki Katayama reiterated the government's readiness to take decisive action. "It would appear from the threat of decisive action that intervention is once again very close," said Shaun Osborne, chief FX strategist at Scotiabank in Toronto. "I don't know that that's going to have any more of an impact on the yen than it's had previously." ECONOMIC RESILIENCE U.S. retail sales rose slightly in June as lower gasoline prices weighed on receipts at service stations. But online spending surged, prompting economists to upgrade their second-quarter growth estimates.