The dollar weakened against its peers today following the release of discouraging figures on US consumer sentiment which dampened optimism regarding the degree to which US economic recovery is underway. The University of Michigan’s consumer sentiment index registered at 93.6 for February dropping from 98.1 in January while experts had forecast an unchanged reading. The university also released its forecast for inflation over the coming 12 months which was up from 2.5% in January to 2.8% for February. Investors were encouraged to reduce long positions in light of the weak data and US holiday on Monday.

The euro weakened against the dollar however the pair closed the week up 0.73% being the third consecutive week of gains. The euro was bolstered by data released out of Germany which revealed that the euro zone’s biggest economy expanded by 0.7% in the last quarter of 2014 while only growth of 0.3% was predicted. Greece and the European Union are scheduled to meet again on Monday to reach an agreement over Greece’s debt issue.

The pound strengthened against the dollar to new 6 week highs as poor US data widely weakened the dollar. The pound was supported by increased demand following remarks from the Bank of England which minimized the risk of deflation in its report on inflation released last Thursday. Another inflation report is set for release on Tuesday and employment numbers for Wednesday will be carefully monitored by the market.

The Swiss franc was virtually unchanged against the dollar. Data released out of Switzerland revealed that producer price inflation declined by 0.6% in January matching forecasts following a 0.4% drop in December.

The yen strengthened against the dollar with the pair down over 0.3% towards Friday’s close having come off its 5 week high set on Wednesday. The yen was also stronger against the euro. 2014 4th quarter economic growth data will be released out of Japan tomorrow and the Bank of Japan is scheduled to make its policy announcement on Wednesday.

The Australian, New Zealand and Canadian dollars strengthened against the dollar with the help of poor US data. Statistics Canada released data which showed that manufacturing sales increased by 1.7% in December well above forecasts for a 0.9% decline.

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