The dollar fell sharply on Friday after the release of University of Michigan survey which showed that consumer confidence in the U.S. fell by more than expected (59.5 from the previous month's reading of 62.5), followed by rumours that the non-farm payrolls figure for April would have to be revised downwards.
Despite the robust housing starts (1.03 million vs expectation of 0.94 million) and building permits (0.978 million vs forecast of 0.92 million) data, which gave a boost to the greenback, dollar fell again as traders squared long positions following the University of Michigan survey. The selling accelerated when rumours surfaced that several data sources computed that non-farm payrolls for April may have been -150,000 as opposed to the -20,000 reported.
Dollar fell versus the yen from 105.10 to 103.52 in part due to cross buying in the Japanese currency (carry trade unwinding due to weak U.S. stock markets) and from 1.0589 to 1.0432 against the Swiss franc. The euro dipped initially to 1.5449 after the release of strong U.S. housing data before rallying to 1.5602 (stops at 1.5550 were triggered).
The British pound also rose strongly, hitting an intra-day high of 1.9600 before retreating on profit taking ahead of the weekend. Sterling had fallen to 1.9361 on Wednesday (within touching distance of 2008 low at 1.9337) before staging a rebound. Australian, New Zealand and Canadian dollar all strengthened against the U.S. unit on firm commodity prices, with the Aussie hitting a new multi-year high at 0.9560.