The US dollar was mixed against the majors this morning following a surprise drop in U.S. retail sales in May, which dented risk appetite and raised questions about the strength of the recovery. The dollar edged up against the yen as data showed U.S. consumer sentiment improved in June, boosted by better job and credit conditions.

The slide in U.S. retail sales sparked some unease about the economy, which has been showing signs of improvement in recent weeks.

Analysts still expect the Federal Reserve to hike U.S. interest rates before counterparts in Japan and Europe, which should support the dollar in the months ahead.

After some consolidation, the euro continued its run against the dollar, remaining well above a multi-year low beneath $1.19 hit earlier this week. A successful auction of Italian bonds has helped bolster the euro following strong demand at a Spanish auction on Thursday. Despite the euro's sell-off this week it is poised to end 1.5% higher against the dollar, which would be its best weekly performance this year.

Most market participants believe the euro will stay under selling pressure for the long term on concerns that debt problems in some euro zone countries are spreading.

The British pound fell over 1% on the day against the dollar and the euro, pressured by earlier weak UK industrial output data. The pound's drop came after data showed an unexpected fall in UK industrial output during April.

The Canadian dollar fell against the greenback on Friday after a weaker-than-expected retail sales report out of the United States, which consumes around three quarters of Canadian exports. Lower oil prices also weighed on the loonie.

The Japanese yen was pressured lower following comments from Japan's new prime minister who stated that overcoming deflation was an urgent issue and warned the country could risk default if it neglects its growing public debt and loses the market's trust.

The Australian and New Zealand dollars rounded off their best week in five months today, leading some analysts to warn the pair may have risen too far too fast given the still fragile mood in markets. For the week, the Aussie and kiwi's gain of 2.7% was the best performance since January.

Some analysts said profit taking may yet gather pace since a nervous market meant few investors would be keen to hold onto the pair for long at present levels. Australia and New Zealand are big sellers of commodities such as iron ore and dairy goods, so their currencies are especially sensitive to perceived changes in the health of the world economy.

Thursday's central bank statement on monetary policy by RBNZ was seen by analysts as supportive of a steady stream of rate hikes this year.

Indicative rates:

EUR/USD

1.2152

USD/JPY

91.20

GBP/USD

1.4758

USD/CAD

1.0298

USD/MXN

12.6492

USD/CHF

1.1406

AUD/USD

0.8504

NZD/USD

0.6906

10-Year Treasury Note Yield: 3.251%

Dow Jones Industrial Average: 10,114.07 -47.89

This market summary is prepared by Union Bank's Global FX Department for the general information of its customers. It is based on the most accurate information currently available, but should not be considered investment advice or a guarantee of future exchange rates or trends.