Market Review - 01/06/2013 01:19GMT

Dollar regains strength on upbeat U.S. consumer confidence

The single currency dropped against the greenback on Friday, weighed by the release of weak German retail sales and EU unemployment data.

German retail sales in April came in at -0.4% m/m n 1.8% y/y, vs the forecast of 0.2% n 0.8% respectively. Euro zone unemployment rate in April rose to record high at 12.2% from 12.1% previously.

Despite Thursday's rise to 3-week high at 1.3062, the single currency took a breather and traded sideways in Asia before dropping to 1.2968 in European morning after data showed a drop in German retail sales and as EU unemployment rate rose to a record high.

Euro briefly staged a rebound to 1.3016 at New York open on dollar's weakness after data showed consumer spending in the U.S. fell in April. However, price met renewed selling there and fell an intra-day low at 1.2944 in New York morning on dollar's strength after U.S. consumer confidence rose in May.

U.S. personal spending in April came in at -0.2%, worse than the forecast of 0.1%. U.S. University of Michigan consumer confidence rose to its highest level in nearly 6 years in May to 84.5, better than the expectation of 83.7.

Versus the Japanese yen, the greenback came under selling pressure in Asia after data showed an increase in Japan's factory output and decrease in deflation. Price eventually fell to an intra-day low at 100.22 at New York open, weighed by release of U.S. consumer spending, however, dollar pared intra-day losses and rebounded to 101.17 in New York morning after the release of better-than-expected U.S. consumer confidence.

Japan industrial production m/m came in better-than-expected at 1.7% vs forecast of 0.6%. Tokyo CPI y/y was reported at -0.2%, higher than expectations of -0.4%.

The British pound remained under pressure in Asia and edged lower to 1.5185 in European morning, however, price rebounded briefly to re-test Thursday's high at 1.5240 at New York open on dollar's weakness. However, cable met renewed selling there and fell in tandem with euro to a session low at 1.5140 in New York morning before staging a recovery to 1.5187 at New York midday.

Data to be released next week :

New Zealand market holiday, Japan business capex, China HSBC manufacturing PMI, non-manufacturing PMI, Australia retail sales, Swiss PMI, France manufacturing PMI, Italy manufacturing PMI, Germany manufacturing PMI, EU, manufacturing PMI, UK manufacturing PMI, U.S. construction spending and ISM manufacturing on Monday.

Australia current account, RBA rate decision, UK BRC retail sales, house prices, construction PMI, EU PPI, Canada trade balance, imports, exports, U.S. trade balance and redbook retail sales on Tuesday.

Australia GDP, China HSBC services PMI, Italy services PMI, France services PMI, Germany services PMI, EU services PMI, GDP, retail sales, UK services PMI, Canada building permits, U.S. labour costs, ADP employment, durable goods, ex. defense, ex. transport, factory orders and ISM non-manufacturing on Wednesday.

Australia trade balance, CPI, UK lloyds employment confidence, BoE rate decision, QE total, Germany factory orders, EU ECB rate decision, U.S. jobless claims and Canada Ivey PMI on Thursday.

Japan leading indicators, Germany trade balance, current account, import, export, WPI, industrial production, France trade balance, UK trade balance, Canada unemployment, U.S. non-farm payrolls, private payrolls, unemployment rate and avg. hourly earnings on Friday.