Dollar Continues To Weaken Heading Into The Weekend
The dollar is losing ground against all of its major competitors at the end of the trading week. The U.S. currency has been falling since the release of the minutes from the July Federal Reserve policy meeting Wednesday afternoon. The minutes suggested that the Fed is moving closer to raising interest rates. In a strong sign that the Fed is considering a September rate hike, it said the pace of job gains had been "solid," with a range of labor market indicators suggesting that underutilization of labor resources had continued to diminish. Most members judged that the conditions for tightening had not yet been achieved, but they noted that conditions were "approaching that point." There were no U.S. economic reports released Friday, following the large number of releases yesterday. There were a number of reports released in Europe, where the data was largely positive. The dollar has dropped to a 2-month low of $1.1350 against the Euro Friday, from Tuesday's high of around $1.10. Eurozone consumer confidence strengthened for the first time in five months during August, preliminary data from the European Commission revealed Friday. The flash consumer confidence index for the euro area rose to -6.8 from July's -7.1. Economists had expected a -6.9 reading. Eurozone private sector growth improved in August underpinned by German activity, while the expansion in France eased to a four-month low, signaling the widening divergence between two largest euro area economies. At 54.1, the flash Purchasing Managers' Index ticked higher from July's final reading of 53.9 and remained at an expansionary level for the twenty-sixth successive month, preliminary data from Markit Economics showed Friday. The pace of increase was one of the fastest seen over the past four years and stayed above the expected level of 53.7. Germany's private sector grew at the fastest pace in four months in August, flash survey data from Markit revealed Friday. The flash composite output index rose to 54 in August from 53.7 in July. The reading reached a 4-month high in August. The French private sector growth slowed to a 4-month low in August, flash survey data from Markit Economics showed Friday. The composite output index fell to a 4-month low of 51.3 in August from 51.5 in July. German consumer sentiment is set to drop unexpectedly in September, as economic and income expectations floundered despite Greece reaching an agreement on a controversial debt deal. The forward-looking consumer sentiment index fell to 9.9 in September from 10.1 in August, survey data from market research group GfK showed Friday. Economists had forecast it to remain unchanged at 10.1. The buck also slipped to a 2-month low of $1.5722 against the pound sterling Friday, but has since bounced back to around $1.5695. The U.K. logged its first July budget surplus since 2012, the Office for National Statistics showed Friday. Public sector net borrowing excluding public sector banks decreased by GBP 1.4 billion to a surplus of GBP 1.3 billion or equivalent to -0.1 percent of gross domestic product in July. This was the first reported July surplus since 2012. Economists had forecast a surplus of GBP 1.1 billion. British households perceive that the value of their home increased in August, a survey from Knight Frank and Markit Economic showed Friday. The house price sentiment index, or HPSI, rose to 59.5 in August from 58.6 in the previous month. This marked the twenty-ninth successive month of the index remaining above 50. The greenback has fallen to a month and a half low of Y122.250 against the Japanese Yen Friday, from around $124.500 on Tuesday. The manufacturing sector in Japan continued to expand in August, and at a faster rate, a preliminary survey from Nikkei showed on Friday, with a Performance of Manufacturing Index score of 51.9. That's up from 51.2 in July, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.
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