The U.S. dollar retreated against most major currencies on Friday after report showed U.S. Consumer Price Index (CPI) in November declined and left more room for further monetary easing measures.

Cheaper energy priced helped push down the CPI by 0.3 percent in November from the previous month despite a modest uptick of food prices, reported the Labor Department on Friday, indicating that there is still space for the Federal Reserve to continue expanding stimulus polices.

The dollar has been under pressure after the Fed on Wednesday announced it would purchase long-term U.S. debt at a pace of 45 billion dollars per month starting in January after Operation Twist expires.

The central bank would continue purchasing mortgage-backed securities at a pace of 40 billion dollars per month. It would also keep the ultra low federal fund rate as long as the unemployment rate remains above 6.5 and inflation is no more than 2.5 percent between one and two years ahead.

The dollar sank from a nine-month high against the yen as many traders believe the yen has been decreasing too sharply recently. The Liberal Democratic Party is widely expected to win Japan's election on Sunday, and the party leader Shinzo Abe is likely to launch large-scale monetary easing policies and press down exchange rate of the yen.

In late New York trading, the euro rose sharply to 1.3160 dollars from 1.3075 dollars of the previous session and the British pound climbed to 1.6167 dollars from 1.6110.

The dollar dropped to 0.9178 Swiss francs from 0.9238 and went up to 0.9863 Canadian dollars from 0.9851. The dollar bought 83.45 Japanese yen, lower than 83.5 in the previous session.

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