TOKYO - The euro was lower in Asian trade on Thursday as disappointing US economic data prompted renewed caution among investors, reducing demand for risky assets.

The euro slipped to $1.4948 in Tokyo morning trade from $1.4961 in New York late Wednesday, and to 133.51 yen from 133.68. The dollar edged down to 89.31 yen from 89.34.

The euro was lower as "risk appetite is failing to show much improvement this week and sharply weaker-than-forecast US housing data dampened sentiment," said Calyon analyst Mitul Kotecha.

But players think the euro's uptrend is intact, and reports on US factory output and joblessness due later Thursday are "unlikely to lead to a reversal in sentiment as concerns about the pace of growth intensify," Kotecha said.

Demand for high-yielding currencies such as the euro -- seen as more vulnerable to weakness in the global economy -- declined after the release of lacklustre US data on inflation and housing starts.

But the greenback's gains were capped by speculation that the US Federal Reserve will keep its interest rates low for some time, reducing the appeal of dollar-denominated assets, dealers said.

"A sub-par recovery and benign inflation outlook are the two main reasons why we believe the Fed will not hike rates for a long while yet," said Kotecha.

A report out on Wednesday showed that US consumer prices rose by a higher-than-expected 0.3% in October, mainly due to higher gasoline prices, but markets remained more concerned about the risk of deflation, dealers said.