The dollar spiked higher versus the euro and sterling Friday morning in New York as demand from riskier currencies waned and traders looked ahead to the latest round of consumer spending and and sentiment data.
Trading on Friday could be impacted by the release of the Commerce Department's report on personal income and spending in the month of February along with the Reuters/University of Michigan's revised reading on consumer sentiment in the month of March.
After suffering steep losses last week, the dollar has rebounded against the euro, rising to a weekly high of 1.3362. With the advance, the dollar moved away from a 10-week low of 1.3737.
Friday, the Eurostat said in a report that the industrial new orders dropped 3.4% month-on-month in January, after falling a revised 8% in December. Economists were looking a decline of 5.6%.
The dollar also rallied versus the sterling, rising to 1.4300 from a recently set multi-week low of 1.4777.
The UK economy contracted in the fourth quarter at the fastest pace since 1980.
A report from the Office for National Statistics showed Friday that the British economy shrank 1.6% sequentially in the fourth quarter, revised down from a contraction of 1.5%. In the third quarter, GDP was down 0.7%. Two consecutive quarters of decline in GDP denotes a recession.
Friday, the UK economy may recover by the end of this year, the Bank of England chief economist Spencer Dale said.
In a speech at the Association of British Insurers Economics and Research Conference in London, Dale said, as we go through 2009, I believe it is most likely that the pace at which output is contracting will ease and that we will see some signs of recovery by around the turn of this year.
The dollar softened a bit versus the yen Friday morning, again unable to break above the elusive 100 mark. The dollar pulled back to 97.30 after challenging 99 on Thursday.
Retail sales in Japan plummeted by 5.8 percent in February when compared to a year earlier, according to government data released Friday.
The decline was the sharpest in 7 years and the 5th straight month of lower retail sales.
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