The greenback and the Japanese rose against most major currencies on Friday as broad-based fall in European and U.S. stocks due to concern on the strength of globabl economic recovery and continued uncertainty in the euro zone over Greece's ballooning budget deficit together with rumour on German chancellor Merkel may resign pressured the single currency, causing investors to move out of risky assets into U.S. dollar and the yen.
At Asian opening, euro nose-dived on rumour that Germany's chancellor Merkel may resign as the latest German opinion poll showed her popularity has fallen to a 3-year low. The rumor was later denied by German officials. Euro has remained under pressure throughout the day and price hit intra-day low of 1.4336 in NY afternoon before stabilizing. In other news, Eurozone inflation rose by 0.3% m/m n 0.9% y/y, in line with market expectation.
Despite rising briefly to intra-day high of 1.6357 in Asia, cable retreated sharply from there. Cable's fall picked up more momentum after the release of better-than-expected U.S. Empire state data in January which rose to 15.92 (economists' forecast was 11.28) from previous month's upwardly revised reading of 4.50 and price reached intra-day low of 1.6211 in NY afternoon before rebound. In other news, U.S. industrial production in December rose by 0.6% as expected with downwardly revised 0.6% increase in November.
Dollar yen traded narrowly in Asia but later ratcheted lower on renewed crss buying in yen, price later fell to 90.60 in Europe and then rebounded to 91.19 on short-covering in NY morning, the greenback retreated against the yen on renewed risk aversions as U.S. stocks tumbled (Dow Jones index over 100 points) after the release of weaker-than-expected University of Michigan consumer sentiment which came in at 72.8 (well below consensus forecast of 73.9). The pair ended the day down over 0.40%.
Data to be released next week include: U.K. Rightmove house price, Japan industrial production on Monday, Japan consumer confidence, U.K. CPI, Germany ZEW index, EU ZEW survey, Canada BOC rate decision on Tuesday, New Zealand CPI, Australia Westpac consumer confidence, Japan tertiary industry index, machine tools orders, Germany PPI, U.K. ILO unemployment rate, BOE meeting minutes, Canada CPI, U.S. building permits, housing starts, PPI on Wednesday, New Zealand retail sales, Australia Westpac leading economic index, Swiss ZEW index, U.K. CBI industrial trend, U.S. jobless claims, leading indicators on Thursday, Germany PMI manufacturing, PMI service, EU PMI manufacturing, PMI service, U.K. retail sales, EU industrial orders, Canada retail sales on Friday. Monday is a market holiday in U.S.