RTTNews - The dollar recovered some of this week's significant losses versus the euro but remained on the ropes against the yen Friday, as traders mulled a slew of key economic figures, including a dismal GDP report from across the Atlantic.
Here in the US, it was a mixed bag of data that kept traders busy. Industrial production fell by a little less than economists had been anticipating, while consumer prices came in unchanged in the month of April.
The dollar was under pressure for most of the week amid optimism that the global economic recovery may be getting underway, fueling appetite for higher-yielding currencies. However, the dollar has even dropped versus the low-yielding yen amid speculation that the US may lose its AAA rating.
Versus its Japanese counterpart Friday, the dollar slipped to a fresh 2-month low of 94.72. With the retreat, the dollar extended a two-week downtrend and inched closer to a 13-year low of 87.08, set in January. The yen was boosted by reports indicating that the Bank of Japan may upgrade its economic assessment soon.
The dollar rallied versus the euro on Friday, rising to 1.462 from a 7-week low of 1.3721. Euro area witnessed its biggest economic contraction since the records began in 1995. Annual inflation stood at historic low, as price pressures stay tilted to the downside amid slowing economic activity.
Friday, flash estimate released by Eurostat, the Statistical Office of the European Communities said the euro area GDP declined 2.5% sequentially in the first quarter of 2009 compared to a 1.6% decline in the fourth quarter.
The dollar was stable versus the sterling, holding near 1.5150 in quiet trading, having stabilized since hitting a 4-month low of 1.5352 earlier in the week.
Consumer prices came in unchanged in the month of April, according to a report released by the Labor Department on Friday, with a notable decrease in energy prices offsetting another substantial increase in tobacco prices.
The Labor Department said its consumer price index was unchanged in April after edging down by an unrevised 0.1 percent in March. The lack of growth in consumer prices came in line with the expectations.
Friday morning, the Federal Reserve released its report on industrial production and capacity utilization in the month of April, showing that production fell by a little less than economists had been anticipating.
The report showed that industrial production fell 0.5 percent in April following a revised 1.7 percent decrease in March. Economists had been expecting production to fall 0.6 percent compared to the 1.5 percent decrease originally reported for the previous month.
The efforts of the Federal Reserve to restore stability to financial markets are showing signs of success, Dallas Federal Reserve Bank Branch President Richard Fisher said Friday, although positive growth will not likely resume until 2010.
In a speech before the Texas Bankers Association, Fisher said that Fed actions have succeeded in pulling the financial markets and the economy from the edge of the abyss.
Federal Reserve Chairman Ben Bernanke said Friday that June demand for the central bank's Term Asset-Backed Securities Loan Facility will exceed May's total. Reports out of Washington indicated that Bernanke made the assessment in a letter to Congressman Keith Ellison (D-Minneapolis) on May 12.
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