The dollar and the Japanese yen rallied against most of their counterparts as a fall in U.S. personal spending raised concerns over the global economic recovery may stall, boosting strong demand for safe-haven assets. U.S. personal spending dropped by 0.5% in September, the biggest decline in nine months. Major U.S. indexes tumbled more than 2%, denting investors' optimism sparked by Thursday's upbeat U.S. Q3 GDP data, the DJI tumbled and closed with a hefty loss of 249 points . Higher-yielding currencies, such as Australian dollar and New Zealand dollar, slumped from 0.9176 to 0.8978 and 0.7334 to 0.7156 respectively in New York afternoon.
In European session, despite euro's brief drop from intra-day high of 1.4859 to 1.4805 against the greenback after the release of an unexpected fall in German September retail sales (decreased by 0.5% versus the expectation of a rise of 0.6%), buying interest on dips lifted the single currency with the help of renewed strength in European stock markets. However, the pair's upside was capped below Thursday's 1.4860 high and the pair fell to as low as 1.4704 in late New York afternoon.
The British pound traded sideways against the dollar in Asian and European session. U.K. Nationwide house prices have come in somewhat mixed with a rise of 0.4% m/m and 2.0% y/y compared to the consensus forecasts of 0.6% and 0.8% respectively. Market reactions to the data was somehow muted. Cable later fell sharply to 1.6409 in tandem with euro in late New York trading.
Earlier in the day, the BOJ's policy board vote on the call rate was unanimous but the central bank said that it will end purchases of commercial paper and corporate bonds in December, a decision which board member Atsushi Mizuno voted against. The Japanese yen advanced sharply across the board in New York morning. Usd/jpy dropped from 91.58 to 89.91, eur/jpy fell from 135.89 to 132.30, aud/jpy dropped from 83.88 to 80.80 while gbp/jpy tumbled from 151.72 to 147.68 in late New York trading.
Tuesday will be a holiday in Japan. Data to be released next week will be Australia house price index, Switzerland PMI, German, eurozone, U.K. manufacturing PMI, U.S. ISM manufacturing, construction spending, pending home sales data on Monday, Australia RBA rate decision, U.K. construction PMI, U.S. factory orders on Tuesday, U.K. nationwide consumer confidence, Australia, retail sales data, German, eurozone, U.K service PMI, eurozone PPI, U.S. ADP employment, ISM non-manufacturing, Fed rate decision on Wednesday, New Zealand unemployment rate, Australia trade balance, Switzerland CPI, U.K. industrial production, manufacturing production, eurozone retail sales, ECB rate decision, U.K. rate decision, Canada building permits and Ivey PMI, U.S. jobless claims on Thursday, Japan leading indicators, U.K. PPI, German factory orders, Switzerland unemployment rate, Canada unemployment rate, U.S. non-farm payrolls unemployment rates and wholesales inventories on Friday.