FOREX-Dollar hovers near 1-week low ahead of G20, U.S. inflation

* Dollar index on track to end lower on the week

* U.S. CPI (Other OTC: CPICQ - news) next focus after series of lacklustre economic data (Updates prices, adds comments)

By Masayuki Kitano

SINGAPORE, April 17 (Reuters) - The dollar wallowed near a one-week low against a basket of major currencies on Friday and was on track for its biggest weekly drop in a month in the wake of poor U.S. economic data.

The dollar retreated this week as a series of lacklustre indicators underscored the view that the Federal Reserve is more likely to raise interest rates later in the year than in June.

The dollar index, which measures the greenback's performance against a basket of major currencies, last traded at 97.596 . It had set a one-week low of 97.282 on Thursday and is down 1.8 percent so far this week.

"It has been a run of weak data in recent weeks, and that's clearly undermining the dollar at present," said Mitul Kotecha, head of FX strategy, Asia-Pacific for Barclays (LSE: BARC.L - news) in Singapore.

If U.S. consumer inflation data due later on Friday comes in soft, that could reinforce the view the Fed will delay any rate hikes and add pressure against the dollar, Kotecha said.

Another event on Friday was a meeting of Group of 20 finance ministers and central bankers, with a communique and news conference expected around 1700 GMT. Analysts, however, played down the event's potential impact on currencies.

A focal point will be whether there will be any comments expressing concerns about dollar strength, possibly from U.S. officials, said Barclays' Kotecha. "But I suspect that's not going to be the case," he said.

Frustrating dollar bulls, data on Thursday showed that U.S. housing starts rose far less than expected in March, extending a string of disappointing data that suggests the economy could struggle to rebound from a soft patch in the first quarter.

Atlanta Federal Reserve Bank President Dennis Lockhart said the recent "murky" run of U.S. data has him leaning against a June interest rate hike. Lockhart quickly added he was confident the economy will remain on track.

"Right now position, data flow and policy comments are working against USD, so even committed longs are trimming positions," said Steven Englander, CitiFX head G10 strategist.

"We do not think this will last, and suspect most investors feel the same, but sensibly feel there needs at least one or more of positioning, policy statements and incoming data to be on their side before extending USD longs."

With the dollar on the back foot, the euro edged up 0.1 percent on the day to $1.0775. For the week, the single currency has climbed 1.6 percent, even amid ongoing jitters about Greece.

Greece on Thursday sounded a mix of defiance and willingness to compromise with its international creditors on reforms required to unlock more loans, as it faces the prospect of running out of money ahead of debt repayments next month.

Against the yen, the euro edged up 0.2 percent on the day to 128.19 yen. The dollar held steady at 118.98 yen , off this week's high near 120.84 yen.

The Australian dollar slipped 0.2 percent to $0.7785 , giving back a bit of ground after having rallied 1.6 percent on Thursday after upbeat local employment data. (Additional reporting by Ian Chua in Sydney; Editing by Jacqueline Wong)