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.

Source: Alliance