The U.S.dollar gained against most rivals Friday, as a week of data reassured investors that December’s dismal employment report wasn’t indicative of a broader shift in the economy.
The Federal Reserve last month determined the economy could withstand the beginning of stimulus withdrawal and decided to reduce its monthly debt purchases by $10 billion to $75 billion this month.
On Friday, data showed construction on new homes fell 9.8% in December to an annual rate of 999,000. Economists had factored cold weather into their forecasts, calling for a decline to a rate of 985,000. Overall, new-home construction starts last year hit the highest level since 2007.
Separately, industrial production grew 0.3% in December, in line with expectations. Consumer sentiment fell in January to a reading of 80.4 from 82.5 in December, as measured by the University of Michigan and Thomson Reuters.
The core measure of U.S. consumer prices, which excludes food and fuel, rose 0.1%, restrained by a record decrease in medical commodities including prescription drugs.
Jobless claims on Thursday decreased by 2,000 to 326,000 in the week ended Jan. 11 from a revised 328,000 in the prior period, a Labor Department report showed in Washington. The median forecast of economists called for 328,000. A Labor Department spokesman said no states were estimated and there was nothing unusual in the data.
US data showed the retail sales rose 0.2% in December while excluding autos they jumped 0.7% during the same period the Commerce Department said Tuesday.
Both readings come above market expectations of 0.1% and 0.4% respectively. Meanwhile, November retail sales was downwardly revised to 0.4% from 0.7%. Over the 12 months of 2013, retail sales rose 4.2%.
Separate report showed the US Business Inventories grew by 0.4% in November, down from the 0.8% increase the previous month, the US Census Bureau informed on Tuesday. This is almost in line with consensus of +0.3%.
EURO
In the January ECB monthly bulletin the Governing Council reiterated their forward guidance of keeping rates at current or lower levels for an extended period of time. An accommodative monetary policy stance would be kept for as long as needed, they declared.
The risks for the Eurozone economic outlook remain on the downside. Global economic uncertainty, as well as higher commodity prices, weak domestic demand and export growth or EU Member States' insufficient reform efforts could weigh on the Eurozone recovery.
Data released showed Germany's price-adjusted GDP expanded 0.4% in 2013 slowing from the 0.7% rise in 2012. German export growth slowed to 0.6% from 3.2% in 2012.
POUND
The pound rose after a report showed U.K. inflation unexpectedly slowed in December, reaching the Bank of England’s 2% target for the first time in more than four years.
Annual consumer-price inflation slowed from 2.1% in November. The median estimate was for the rate to remain unchanged.
National Statistics informed on Friday that year-over-year UK Retail Sales grew 5.3% in December, compared with the 1.8% increase in November and above forecasts of +2.6%. On a monthly basis UK Retail Sales rose 2.6% in December, after growing 0.1% in November and above expectations of increasing 0.4%.
Annual Retail Sales excluding Fuel climbed 6.1%, up from the 2.1% rise and above market consensus of 3.2% growth. Month-over-month Retail Sales excluding Fuel edged up 2.8%, following a 0.2% increase and exceeding expectations of +0.3%.
YEN
The yen fell after a government report showed Japan’s current-account deficit widened to a record in November.
Japan’s currency declined as separate data showed investors boosted holdings of dollar-denominated bonds for a fifth month. Japan posted a record 592.8 billion yen shortfall in its current account, the Ministry of Finance said in Tokyo.
BOJ Governor Haruhiko Kuroda said the central bank will continue easing until the price target is stable and the stimulus program is having the intended impact.
COMMODITY CURRENCIES
AUSSIE: In Australia, jobs decreased by 22,600 last month, following November’s revised 15,400 gain, the statistics bureau said today. That compares with a 10,000 increase predicted by economists. The unemployment rate held at 5.8%, the highest in four years.
The market-implied probability that the Reserve Bank of Australia will reduce its record-low benchmark interest rate by July rose to 43% from 24%, swaps data show.
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