The Japanese yen rallied broadly against major currencies as renewed concern that credit market losses are spreading spurred investors to sell higher-yielding assets as American International Group Inc. said it needs $12.5 billion to offset subprime writedowns following two consecutive record quarterly losses. The greenback fell sharply from 103.96 to 102.61 against the Japanese yen and the single currency tumbled versus Japanese from 160.05 to 158.60.
The single currency rose against the U.S. dollar from 1.5393 to 1.5489 before retreating briefly to 1.5422 after a report showed the U.S. trade deficit narrowed more than forecast in March. The U.S. currency fell against the Swiss franc from 1.0516 to 1.0390 on Friday.
The British pound fell from 1.9570 to 1.9459 on speculation the Bank of England will cut interest rate soon on slowing U.S. economic growth due to the fallout from the collapse of the U.S. subprime-mortgage market, however, cable rebounded later in the day and closed at 1.9540 due to short-covering. Sterling tumbled against the Japanese yen from 203.25 to 199.84.
U.S. currency fell sharply against Canadian dollar from 1.0176 to 1.0047 after a report showed Canada’s employers added more jobs in April than economists forecast. The Canadian dollar also got a boost from the rising crude oil prices, which rose to a fresh record high of $126.27 per a barrel as commodities account for about half of Canada's exports.
Next week will see the release of Japan's economic watch and machine tools orders, U.K. trade balance and PPI and U.S. Fed budget on Monday; U.K. RICS house prices, BRC retail sales, CPI, DCLG house price and RPI, U.S. retail sales and business inventories on Tuesday; Japan's domestic CGPI, trade balance and current account, U.S. average earnings, U.K. claimant count and ILO unemployment rate, eurozone industrial orders, U.S. CPI and real earnings on Wednesday; Japan's machine orders, German CPI, GDP and HICP, eurozone GDP and HICP, U.S. jobless claims, Empire state manufacturing, cash flows, capacity utilisation, industrial production, Philadelphia Fed survey and NAHB housing market index on Thursday; Japan's GDP, capacity utilisation, consumer confidence and industrial production, eurzone trade balance, U.S. building permits, housing starts and University of Michigan survey on Friday.