Dollar Withstands Wild Week
The dollar was little changed on Friday despite a flurry of economic news from the U.S., as a sense of calm returned to the markets following dramatic volatility earlier in the week.
The buck held up relatively well amid a dizzying array of news this week, rebounding from record lows against the Swiss franc and holding steady versus the surging yen.
The dollar was stuck in neutral versus the euro, even after data showed the French economy recorded zero growth in the second quarter largely due to a decline in consumer spending.
Gross domestic product remained flat on a sequential basis in the second quarter after expanding 0.9 percent in the first three months of the year, the statistical office Insee said Friday. Economists had expected the economy to grow 0.3 percent.
The dollar was steady at $1.4240 versus the euro, having bounced back and forth around that mark for the past few weeks.
The buck rose to CHF 0.7750 versus the Swiss franc, moving further from this week’s record low of 0.7066. Swiss authorities have successfully convinced traders that they will intervene to weaken the franc if its get any stronger.
Japanese officials have intervened twice to halt the yen’s rally, to minimal effect. The dollar was hovering near a record low of Y76.28 versus the yen.
The buck stayed around a penny below parity versus its Canadian counterpart, having gained significant ground this week.
Consumer sentiment in the U.S. has seen a substantial deterioration in the month of August, according to a report released by Reuters and the University of Michigan on Friday, with the consumer sentiment index falling to its lowest level in over thirty years.
Reuters and the U of M said that the preliminary reading on their consumer sentiment index for August came in at 54.9, down sharply from the final July reading of 63.7. Economists had been expecting the index to edge down to 63.0.
U.S. retail sales grew slightly less than anticipated in month of July, according to figures released Friday by the Commerce Department, although sales rose by more than expected when excluding auto sales.
Overall retail sales grew by 0.5 percent in July, marginally less than the 0.6 percent growth predicted by most economists. The sales growth followed an upwardly revised 0.3 percent increase in June.
The Federal Reserve should not have pledged to keep interest rated low until mid-2013 last week, a member of the central bank’s rate setting board said Friday.
Last week, the Federal Open Market Committee voted to expand its “extended period” vow, easing market concerns by setting a date-certain for keeping ultra-low rates.
In a rare explanation of a dissenting vote, Narayana Kocherlakota, President of Federal Reserve Bank of Minneapolis, said the Fed’s shift in language was not appropriate given recent economic developments.
