The Swiss franc declined to an 8-day low against the US dollar and a 4-day low versus the Japanese yen during Friday's early European deals. On the other hand, the franc showed strength against the European currency and the British pound. The Swiss currency thus hit a 2-day high versus the pound.
Against the US dollar, the Swiss franc traded down during early deals on Friday. At 6:15 am ET, the franc declined to an 8-day low of 1.1414 against the dollar, compared to 1.1273 hit late New York Thursday. The next downside target level for the US currency is seen around 1.153.
The Swiss franc that closed Thursday's North American session at 1.5248 versus the European currency touched a low of 1.5304 at 3:50 am ET Friday. Thereafter, the franc reversed its direction and is currently quoted at 1.5266 against the euro with 1.515 seen as the next target level.
The German January import price index, French final fourth quarter GDP, Italian and the Euro-zone industrial orders report for January, which were released today likely influenced the euro.
The Eurostat said today 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%.
French statistical office INSEE said gross domestic product or GDP contracted less than previously estimated in the fourth quarter of 2008.
Final data showed today that GDP fell 1.1% quarter-on-quarter in the last three months of the previous year, compared with a 1.2% decline estimated previously. In the third quarter, the economy expanded only 0.1%
Germany's Federal Statistical Office announced today that the import price index dropped 5.4% year-over-year in January, after falling a revised 4.1% in December. This was the steepest decline since February 1999. Economists were looking a decline of 6% for January.
Against the British pound, the Swiss currency edged higher during Friday's early deals. At 2:30 am ET, the franc reached a 2-day high of 1.6228 against the pound, compared to Thursday's closing value of 1.6295. Thereafter, the franc slipped but regained shortly and is now worth 1.6280. On the upside, 1.619 is seen as the next target level for the Swiss franc.
The British currency fell as a final report showed that the UK economy contracted more than initially estimated in the fourth quarter of 2008.
The UK economy contracted 1.6% sequentially in the fourth quarter, revised down from a decline of 1.5%, a report from the Office for National Statistics showed. The economy entered its first recession since 1991.
Year-on-year, GDP was down 2% in the fourth quarter. According to the initial estimate, the British economy had fallen 1.9%. For the whole year 2008, GDP rose 0.7%, unrevised from the previous estimate.
Another report showed that UK's current account deficit narrowed to GBP 7.6 billion in the fourth quarter of 2008 from a revised deficit of GBP 8.2 billion in the previous quarter. Economists had expected deficit to contract to GBP 5.9 billion, while the third quarter shortfall was revised from a GBP 7.7 billion deficit. The fourth quarter deficit was equivalent to minus 2.1% of GDP compared with minus 2.3% in the previous quarter.
The UK economy may recover by the end of this year, the Bank of England chief economist Spencer Dale said today.
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 Swiss franc extended its Asian session's downtrend against the Japanese yen during early European deals on Friday. The franc-yen pair that closed Thursday's New York deals at 87.62 dropped to a 4-day low of 85.88 at 6:15 am Eastern time. If the pair falls further, 84.8 is seen as the next target level.
The yen advanced despite reports showed that Japan's consumer prices stalled in February and retail sales tumbled the most in seven years, suggesting the economy was edging toward deflation. Consumer prices in Japan posted little or no change for the year to February. The government reported that its core consumer price index was unchanged in February from one year earlier, while the overall CPI was down 0.1 percent on year. The data showed overall inflation was down 0.3 percent compared to one month earlier.
The information triggered warnings from analysts that Japan faces deflation, but Finance Minister Kaoru Yosano reacted Early Friday saying it was too early to conclude that deflation was already occurring. I believe it is too early to describe the 0.1 percent decline as deflation, Yosano told reporters in Tokyo.
Another report showed that retail sales in Japan plummeted by 5.8 percent in February when compared to a year earlier. The decline was the sharpest in 7 years and the 5th straight month of lower retail sales.
Turning to the US, the Bureau of Economic Analysis is due to release its personal income & outlays report for February. Economists estimate the report, which is due out at 8:30 am ET, to show that personal income fell 0.1% during the month. On the other hand, personal spending is expected to have risen 0.3% in the month.
The final reading of the University of Michigan's consumer sentiment index for March is due to be released at 10 am ET. The report is expected to show that the consumer sentiment index edge down to 56 from the mid-month reading of 56.6.
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