The greenback little changed on Friday after mixed U.S. data: May 19, 2014

Market Review - 16/05/2014 18:40GMT

The greenback little changed on Friday after mixed U.S. data

The dollar ended little changed against its major peers on Friday after the release of mixed U.S. economic reports, investors continued to monitor developments in Ukraine as U.S. Secretary of State John Kerry warned Russia it faced broader economic and industrial sanctions if it meddled in Ukraine's presidential elections on May 25.

Versus the Japanese yen, although dollar retreated after meeting renewed selling at 101.64 in Asia and edged lower to 101.42 and then 101.36 at European midday, price staged a brief rebound to a fresh session high at 101.68 due to the release of upbeat U.S. housing data. Later, the disappointing U.S. consumer sentiment index capped intra-day gain and dollar edged lower again in quiet New York afternoon session.

Official data showed U.S. building permits rose 8% to 1.080 million units last month, from an upwardly revised 1.000 million in March. Market had expected building permits to rise to 1.010 million units in April. In a separate report, U.S. housing starts rose to 1.072 million units in April, from 0.947 million in March, whose figure was revised up from a previously estimated 0.946 million. Later, a preliminary report from the University of Michigan said its consumer sentiment index fell to 81.8 in May, from a reading of 84.1 the previous month, compared to expectations for a rise to 84.5.

Although the single currency staged a bounce to 1.3727 in European morning, selling interest below Thursday's New York high at 1.3732 checked intra-day gain there and investors shrugged off the larger-than-expected euro zone trade surplus in March and knocked euro down to 1.3685. Later, price rebounded to 1.3719 in New York morning after the mixed U.S. economic reports and then eased in New York afternoon.

Cable strengthened on Friday on active cross-buying in sterling versus euro and yen. Despite a brief retreat from 1.6812 to 1.6785 in European morning, renewed buying interest lifted price from there and cable later rose to a session high of 1.6840 after release of mixed U.S. data, however, concerns of 'no rush to hike interest rates' after Bank of England's latest growth forecasts in its quarterly Inflation Report on Thursday prevented the pair to rise further and the British pound then eased in quiet New York afternoon.

News on Reuters on geopolitical tension in the Ukraine, U.N. Rights Chief Pillay said 'U.N. Human Rights Monitors find "alarming deterioration in human rights situation" in east Ukraine; they are concerned about security of candidates in Ukraine's May 25 presidential election.

In other news, ECB policymaker Benoit Coeure said at a forum in Warsaw that 'we know with very low interest rates there will be market risks, but have the tools to address.' Later in the day, Fed's James Bullard spoke on monetary policy on Little Rock and said 'inflation "going to rise in the near future"; considers neutral Fed funds rate to be four percent; housing "a surprise to the downside," 2014 has been weaker than anticipated; U.S. inflation data this week "a signal" inflation is moving back to target; recent jobs data "very encouraging" and shows improvement in labor market; FOMC willing "to get more aggressive" if inflation takes off; too early to tell if interest rate increase should come sooner than currently anticipated; personally expect rates to rise near end of Q1 2015.'

Data to be released on Monday :

New Zealand PPI input, PPI output, U.K. Rightmove house prices, Japan machine tool orders,, euro zone construction output. Market in Canada will be closed due to Victoria/Patriots' Day.