The greenback strengthened against most of its counterparts on Friday as investors cut risk exposure amid concerns of a possible Dubai debt default. Although the dollar nose-dived against the Japanese yen to a 14-year low at 84.82 in Australian trading, the pair then rebounded strongly at Tokeyo opening after Japan Finance Minister Fujii said that he was flexible about contacting with the currency authorities in the U.S. and Europe in response to the yen’s recent surge. Usd/jpy later rallied to 87.02, eur/jpy jumped from 126.95 to 130.16, gpb/jpy surged from 139.33 to 143.48 while aud/jpy rose from 76.58 to 79.18 in New York morning.
Euro tumbled to as low as 1.4827 in tandem with intra-day broad-based rally in dollar on Friday as investors flocked to safe-haven assets after hitting a 15-month high of 1.5145 against the dollar on Wednesday. However, the pair then rebounded from there due to sovereign demand together with short-term buying on speculation that Dubai's wealthy emirate neighbour Abu Dhabi will eventually step in to offer finanical support. In addition, a monthly European Commission showed that eurozone economic sentiment rose to 88.8 points from Oct's 86.1 (also better economists' median forecast of 88.0), marking an eighth straight month of improvement. The single currency later rose to as high as 1.4990 in New York morning.
The British pound remained under pressure in Asia and fell to 1.6272 in European morning. However, cable later followed rebound in euro and moved back up strongly in New York session as European equity markets pared early losses and turned into positive territory. Cross buying on sterling versus euro also lifted the pound as eur/gbp retreated from 0.9135 to 0.9060. Gbp/usd later rebounded to 1.6512 in New York morning trade.
Data to be released next week include Japan manufacturing PMI, industrial production, construction orders, housing starts, U.K. Gfk survey, eurozone HICP flash data, Canada GDP, U.S. Chicago PMI, mid-west manufacturing on Monday, Australia RBA rate decision, Switzerland GDP, PMI, U.K. Nationwide house price index, German retail sales, German and eurozone manufacturing PMI and unemployment rate, U.S. construction spending, ISM manufacturing, pending home sales on Tuesday, U.K. construction PMI, eurozone PPI, U.S. ADP employment, Fed's beige book on Wednesday, Japan business capes, Australia retail sales, Geman and U.K. service PMI, eurozone ECB rate decision, GDP and retail sales, U.S. weekly jobless claims, labour cost, ISM non-manufacturing on Thursday, Switzerland combined PPI, Canada unemployment rate and Ivey PMI, U.S. non-farm payrolls, unemployment rate, durable goods orders on Friday.