The dolar weakened against its peers on Friday as markets were pressured by declining oil prices and losses in the yuan which reduced predictions of a rate increase by the Federal Reserve for this week’s policy meeting. The dollar softened as oil traded at near 7 year lows amid fear the global supply surplus will increase next year, fueling worry over global inflation and the strength of the global economy. Market concern had been intensified as the yuan traded at 4.5 year lows and investors feared the effect of China’s economy lagging in growth. Earlier in the session the dollar had strengthened as data revealed US retail sales climbed 0.6% in November after rising 0.2% in October. US producer price index was up 0.3% in November. The US Dollar Index closed out Friday flat at 97.6 off its high of 98.19 reached earlier in the session closing out the week down 0.8%.
The euro strengthened against the dollar with the pair up 0.48% trading at 1.0992 towards Friday’s close closing out the week up 1.03% cutting losses from the previous session. The pair had come off its session high of 1.1030 after having come off its session low reached earlier in the day. Earlier in the week the euro surged to 1 month highs against the dollar as the market dealt with the aftermath of the European Central Bank’s shocking move to adjust its bond buying program while falling short of market expectations for a comprehensive increase in stimulus measures. Data due to be released on Wednesday on euro zone private sector growth will be closely watched for indications of economic recovery.
The pound strengthened against the dollar with the pair trading at 1.5217 towards Friday’s close. The pair had come off its session high of 1.5239 after having come off its session low of 1.5124 reached earlier in the day. The pound still faced pressure from the Bank of England’s decision on Thursday to keep rates unchanged at 0.5% following an 8 to 1 vote.
The yen strengthened trading at 5 week highs against the dollar with the pair falling to 120.57 to cut gains at 120.99 towards Friday’s close closing out the week down 1.81%. The yen had come off its session low of 120.58 after having come off its session high of 122.22 reached earlier in the day. The yen was supported by safe haven demand as market entered risk off trade amid decline in oil and the yuan.
The Australian, New Zealand and Canadian dolars weakened against the greenback. The Aussie declined over 1% against the greenback with the pair trading at its session low of 0.7184 towards Friday’s close after having come off its session high of 0.7281 reached earlier in the day. The kiwi dollar dropped over 0.5% against the dollar trading at 0.6712 towards Friday’s close off its session low of 0.6701 after having come off its session high of 0.6780 reached earlier in the day. The loonie lost over 0.5% to the dollar with the pair trading at 1.3733 towards Friday’s close, coming off its session high and new 11.5 year high of 1.3756 after having come off its session low of 1.3622 reached earlier in the day. The loonie had to contend with selling pressure surrounded by declines in oil prices to 7 year lows due to the continued global supply surplus.
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