The Dollar fell on Friday as US consumer confidence raised concerns about an economic contraction in the second quarter and trimmed the chances the Federal Reserve will raise interest rates this year. The unexpectedly sharp drop in a consumer sentiment index to a 28-year low in May eclipsed a report showing a rebound in building permits and construction starts for new US homes, which briefly triggered some Dollar buying.
EurUsd raced to a Friday 1.5601 peak. It was last trading at 1.5577, up 0.76%. UsdJpy tumbled to a session 103.53 low and was last quoted at 104.05 down 0.65%. UsdChf was 0.84% lower at 1.0476. GbpUsd rose 0.51% at 1.9576.
Speculation that April's non-farm payrolls report would be revised to show deeper job losses than the initially reported 20k contraction probably added to the Dollar's slide, but analysts were skeptical. Data on Friday showed combined figures from the country's various states indicated job losses of 151,000 in April.
The dollar has rallied in recent weeks on views that the Fed's cycle of interest rate cuts was nearing an end. A pause by the US central bank after slashing its fed funds rates target by 325bp to 2% since mid-September would support the Dollar, which has lost its yield appeal to the Euro. Euro-zone interest rates have remained at 4% since June, but analysts recall slower economic growth could force the ECB to move towards an easing path later this year. US interest rate futures were pricing an 88% chance that the central bank would leave its benchmark rate steady in June.
The University of Michigan Survey said its preliminary index of confidence fell more sharply than economists had expected in May to its lowest since June 1980. Housing starts in April ran at a 1032k, up from a revised 954k unit rate in March, while permits gained 4.9% to 978k a year from a revised 932k in March.