Dollar Recovers From Early Losses After Mixed Economic Reports
Washington (Nov 14) The dollar is has reversed early weakness Friday afternoon and is now positive in comparison to all of its major competitors. The buck is posting its largest gain against the Euro, after Eurozone GDP came in weaker than expected.
Investors were hit with a number of US economic reports this morning, which had mixed results. Retail sales and the producer price index were disappointing, but consumer sentiment and business inventories were better than anticipated.
Retail sales in the US rose less than expected in the month of October, according to a report released by the Commerce Department on Friday. The report said retail sales inched up by 0.1% in October, while revised data showed that sales were virtually unchanged in September.
Economists had expected sales to climb by 0.3% compared to the 0.1% uptick originally reported for the previous month.
Reflecting continued decreases in prices for food and services, the Labor Department released a report on Friday showing an unexpected decrease in US producer prices in the month of October. The Labor Department said its producer price index for final demand fell by 0.4% in October after sliding by 0.5% in September. Economists had expected the index to rise by 0.2%.
With retail and wholesale inventories showing notable increases, the Commerce Department released a report on Friday showing unexpected growth in US business inventories in the month of September.
The report said business inventories rose by 0.3% in September after inching up by a revised 0.1% in August. Economists had expected inventories to come in unchanged compared to the flat reading originally reported for the previous month.
Mainly reflecting a stronger outlook for the domestic economy, the University of Michigan released a report on Friday showing a bigger than expected improvement in US consumer sentiment in the month of November.
The University of Michigan said the preliminary reading on its consumer sentiment index for November came in at 93.1 compared to the final October reading of 90.0. Economists had expected the index to climb to 92.0.
The dollar slipped to an early low of USD1.0808 against the Euro Friday, but has since risen to around USD1.0730 .
Eurozone trade surplus rose in September after easing in the previous month and exceeded economists' expectations, figures from Eurostat showed Friday. The seasonally adjusted trade surplus increased to EUR 20.1 billion from EUR 19 billion in August. Economists had expected a EUR 19.3 billion surplus figure.
Eurozone economic growth eased marginally in the third quarter, intensifying expectations for additional monetary stimulus from the European Central Bank at its December meeting.
Gross domestic product grew 0.3% from the previous three months, which was weaker than the 0.4% expansion seen in the second quarter, flash estimates from Eurostat showed Friday. Economists had forecast growth to remain unchanged at 0.4%.
German economic growth moderated in the third quarter on weak investment and foreign trade, while the French economy gained momentum on the back of domestic demand.
Gross domestic product of the largest euro area economy climbed 0.3% from the second quarter, when it grew 0.4%, data from Destatis showed Friday. The third quarter growth came in line with expectations.
At the same time, French GDP logged 0.3% sequential growth after stagnating in the second quarter, the statistical office INSEE reported. The economy had expanded 0.7% in the first quarter.
The buck dropped to an early low of USD1.5262 against the pound sterling Friday, but has since rebounded to around USD1.5225 , nearly unchanged for the session.
UK construction output declined for a third straight month in September, defying expectations for an increase and confirmed a sharp slump for the third quarter, data from the Office for National Statistics showed Friday.
Construction output decreased 0.2% from August, when it tumbled 3.4%, revised from a 4.3% fall reported earlier. Economists had expected a 1.5% increase.
The greenback fell to a low of Y122.490 against the Japanese Yen Friday morning, but has since bounced back to around Y122.800 .
Japan's industrial production grew slightly more than estimated in September, final data from the Ministry of Economy, Trade and Industry showed Friday. Industrial output grew 1.1% month-on-month in September, slightly faster than the 1% increase estimated initially.