The US dollar gave up more of its recent gains on Friday, although it regained ground to the euro, yen, and franc. Data from the US economy was stronger than expected, as the flash manufacturing PMI rose from 51.2 to 52.7 versus the projected 51.5 figure. Existing home sales also rose from 4.76M to 5.46M. For today, there are no reports out of the US economy so risk sentiment might push dollar pairs around.
The euro resumed its slide against its peers, particularly the commodity currencies, when risk appetite kicked in. Data from the euro zone was mostly weaker than expected, with the German and French flash manufacturing PMI coming in weaker than expected. ECB Governor Draghi is set to give a testimony today and he might reiterate their easing bias while the German Ifo business climate index is slated to tick down from 108.7 to 108.5.
The pound was on strong footing last Friday that not even the downbeat retail sales report from the UK was enough to stop its rallies. Headline consumer spending fell by 1.0% but the public sector deficit narrowed to 6.9 billion GBP, giving the pound an additional boost. There are no major reports due from the UK today.
The franc followed the euro’s footsteps and gave up ground to most of its rivals when risk appetite picked up. There were no reports out of the Swiss economy then and none are due today, leaving risk sentiment in play.
The yen gave up most of its gains for the week on Friday, with traders positioning ahead of potential BOJ easing this week. Japan’s flash manufacturing PMI fell from 52.6 to 52.4 instead of improving to the estimated 52.8 figure but the trade surplus widened from 0.04T JPY to 0.06T JPY.
Commodity Currencies (AUD, NZD, CAD)
The comdolls took advantage of the pickup in commodity prices and risk appetite last Friday, advancing against their forex counterparts throughout the day. Data from Canada was mixed, with retail sales beating expectations and CPI falling short. In Australia, the NAB business confidence index fell from 5 to 3, indicating lower optimism.