The greenback and the Japanese yen recouped previous day's losses against other major currencies as U.S. consumer confidence fell to its lowest in four months on concerns over high unemployment and dismal personal finances, increasing demand for the dollar as safe-haven asset. The University of Michigan Surveys of Consumers said its final index of confidence for August dropped to 65.7 from 66.0 in July. Euro pared all its intra-day gains against the dollar after the release of the weaker-than-expected U.S. data and the pair tumbled from 1.4389 to 1.4281 due to triggering of stop losses orders in thin New York afternoon session.
The British pound ended the day little changed versus the greenback on Friday although data showed that the U.K. economy contracted at a slightly slower pace than previously estimated. The Office for National Statistic said that U.K. Q2 GDP revised up to –0.7% q/q, however, it took the annual drop up to 5.5%, the sharpest fall since records began in 1955. Cable initially rose to an intra-day high of 1.6382 in Europe but the upside was somehow limited as traders were hesitant to take on big positions in the currency before a Bank Holiday weekend in U.K. Sterling later dropped to as low as 1.6257 in late New York trade on long liquidation.
Earlier in Asian trade, the Japanese yen weakened broadly as economic reports showed that Japanese deflation and the unemployment rate at record levels and house spending fell sharply. Japanese’s unemployment rose to 5.7% in July and surpassed the previous record 5.5% in April 2003. However, the yen strengthened against the dollar in New York morning and hit an intra-day high of 93.42 before stabilising due to risk aversion. In addition, a Japanese national election will take place on Sunday, with a widely expected victory for the opposition Democratic Party of Japan.
Monday is a holiday in U.K. Data to be released include Japan industrial production, retail sales, construction orders, housing starts, eurozone HICP flash index, Canada GDP, U.S. Chicago PMI on Monday, Australia current account, RBA rate decision, Switzerland GDP, German retail sales, German, eurozone, U.K. manufacturing PMI, German and eurozone unemployment rate, U.S. construction spending, ISM manufacturing, pending home sales on Tuesday, Australia GDP, U.K. construction PMI, eurozone GDP, PPI, U.S. ADP employment, labour cost, durable goods orders, factory orders and release of August FOMC meeting minutes on Wednesday, German, eurozone, U.K. service PMI, eurozone retail sales, ECB rate decision, U.S. jobless claims, ISM non-manufacturing on Thursday, Japan business capex, Switzerland CPI, Canada unemployment, U.S. unemployment, non-farm payrolls, Canada Ivey PMI on Friday.