The dollar rallied strongly against major currencies on Friday as U.S. gross domestic product exceeded forecasts, growing at the fastest pace since 2003, reinforcing the view the United States was recovering faster than other developed countries. U.S. GDP data came in at 5.7% in 4th quarter of 2009 versus the economists forecast of 4.6%. Chicago PMI was 61.5 compared to the consensus forecast of 57.4 from downwardly revised reading of 58.7 and University of Michigan consumer sentiment was 74.4 in January against the expectation of 73.0 and well above 72.5 in December.
Euro continued Thursday's downward momentum versus the greenback in Asia as investors remained concerned over the fiscal health of some of the smaller eurozone countries like Greece and Portugal. The single currency rebounded briefly to 1.3988 in European morning on short-covering due to renewed risk appetite as Greek/German 10-year government bond yield spread narrowed by 15 basis points to 382 basis points. However, price retreated from there and later tumbled to six-month low of 1.3862 in NY afternoon before stabilizing.
Versus the swiss franc, the dollar rallied to as high as 1.0644 (eur/chf rose from 1.4635-1.4770 in an hour) in NY afternoon despite a brief fall to 1.0483 in European mid-day. Traders said the Bank of International Settlements was buying the eur/chf, though the BIS declined to comment. The BIS had acted on behalf of the Swiss National Bank in the past to weaken the franc. The SNB was not immediately available for comment.
Data to be released next week include Australia house price index, Germany retail sales, manufacturing PMI , EU manufacturing PMI, U.K. manufacturing PMI, U.S. PCE core, PCE index, PCE index, personal income, personal income, personal spending, construction spending, ISM manufacturing Swiss PMI on Monday, Australia RBA rate decision, U.K. PMI construction, EU PPI, U.S. pending home sales on Tuesday, Australia trade balance, Germany retail sales, Germany services PMI, U.K. services PMI, EU retail sales, U.S. ADP employment, U.S. ISM non-manufacturing on Wednesday, New Zealand employment change, Australia retail sales, Swiss trade balance, Germany factory orders, Germany factory orders, EU ECB rate decision, U.S. jobless claims, durable goods, factory orders, Canada building permits, Ivey PMI on Thursday, Japan leading indicators, U.K. PPI input on Friday.