The dollar weakened against its peers late on Friday after coming off a four and a half year high set earlier in the session following the release of data which revealed that even though consumer confidence for this month was favorable forecasts for US inflation had dropped. The University of Michigan’s consumer sentiment index climbed to a 7 year high above forecasts and last month’s reading. However figures also revealed that consumer expectation of annual inflation dropped from 2.9% in October to 2.6%. The high at been set on the back of US retail sales figures which climbed 0.3% last month leading to profit taking which coupled with euro zone growth data sent the dollar back down.
The euro strengthened against the dollar after the pair was trading at the lows of the day earlier in the session following economic data which revealed that US retail sales increased by 0.3% in October above expectations for a 0.2% increase. Previously data released of out the euro zone revealed that its economy grew 0.2% in the 3rd quarter, down from a 0.6% expansion for the same period last year. Greece ended 6 years of recession while Germany and France barely evaded recessionary territory and Italy dropped back into a recession. The euro was stronger against the yen climbing to a 6 year high against the widely weaker yen.
The yen weakened against the dollar with the pair hitting a 7 year high on the back of US retail sales figures. The yen still had been facing pressure to sell being surrounded by more talk that Prime Minister Abe might call an election in December in order to fast track his reforms which include a weaker yen in order to trigger economic growth.
The pound weakened against the dollar to new 14 month lows following an announcement from the Bank of England which confirmed a high chance of increased deflation. As a result the market pushed back its prediction for when the central bank will increase rates towards the end of next year.
The Australian, New Zealand and Canadian dollars were stronger against the dollar. Statistics Canada released data which showed that manufacturing sales jumped by 2.1% in September well above forecasts for a 1.3% increase.
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