Dollar ended mixed in New York after initial rebound vs European and the 3 commodity currencies on news of 2 bomb blasts in Jarkata prompted investors to flock the greenback as safe-haven currency in Asian morning trading. However, later in the day, dollar retreated in New York opening before moving sideways after a mixed batch of U.S. corporate earnings raised some concerns about the economy and increased the dollar’s safe-haven appeal. Later in the day, earning results came out for Bank of America and Citigroup, the No.1 and No. 3 banks by assets, fell short of market expectations. These disappointing results pared some hopes for growth resuming in the near future, lifted the dollar in New York afternoon session. The ICE dollar index that measures the greenback against a basket of currencies added 0.2% after falling to a six-week low on Thursday.
In early European session, eurozone posted trade balance in May at 1.9 billions compared to economists’ forecasts of 2.7 billions and the reading of 2.7 billions in April. The market reaction to this data was somehow muted as the focus was on U.S. companies' earnings transcripts. In New York morning, euro fell from its recent high of 1.4166 formed on Thursday to as low as 1.4062 versus the dolllar partly due to long liquidation and the discouraging results from Bank of America and Citigroup. However, the single currency was able to recover some of its intra-day losses against the greenback after the release of better-than-expected U.S. housing data. U.S. building permits and housing starts rose by 8.7% to 0.563 million units and by 3.6% m/m 0.582 million units versus the economists' forecast of 0.520 million and 0.530 million respectively. Euro retreated in late New York afternoon after Moody’s Investor Service placed AAA ratings of California’s two main public pensions, California Public Employees Retirement System and California State Teachers Retirement System, on review for a possible downgrade, citing concerns about the declining credit quality of the state.
The British pound fell to an intra-day low of 1.6266 partly due to a report from International Monetary Fund stated that “U.K. Prime Minister Gordon Brown risks putting further pressure on sterling unless he curbs Britain’s budget deficit”. Earlier, news which came out in Asian morning of 2 bomb blasts in Jarkarta renewed demand U.S. dollar as a refuge from turmoil and lifted the dollar. However, sterling found buying interest on dips and pared its intra-day losses against the greenback after the release of upbeat U.S. housing data before retreating after Moody's news later in the day.
Monday will be a holiday in Japan. Data to be released next week include U.K. Rightmove housing price, Australia PPI, German PPI, Canada wholesales sales, U.S. leading indicators on Monday, BoJ minutes, Australia board minutes, Switzerland trade balance, U.K. PSNCR, Canada BoC rate decision and Fed’s Bernanke will speak at 14:00GMT on Tuesday, eurozone industrial orders, Canada retail sales, U.S. house price index on Thursday, German and eurozone service and manufacturing PMI, German Ifo index, U.K. GDP, U.S. University of Michigan survey on Friday.