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Mon, Jun 29 2009, 03:47 GMT

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 Market Review - 26/06/2009 19:02      All times in GMT  
Dollar drops vs major currencies as better-then-expected U.S. data revive hope for economic recovery

The greenback fell broadly on Friday as China repeated its call for a supranational currency and U.S. data were slightly better than expected. Personal income in May came out at 1.4%, better than forecast 0.3%, University of Michigan survey in June came out at 70.8 (versus forecast 69.0).  
 
The euro extended overnight gain in Asia and despite easing in European morning, price rose again after comments by People's Bank of China. Later, the release of better-than-expected U.S. data which fuelled hopes for a global economic recovery, helped the single currency rally to as high as $1.4119 per dollar and price ended at 1.4055, gaining 1% vs dollar for the week.  
 
Cable surged fm 1.6375 to 1.6498 in European opening with traders cited short-covering ahead of weekend and the pair received another boost after the release of U.S. data. Sterling rose to as high as 1.6564 and ended at 1.6521, finishing the choppy week with almost no change against the dollar.   
 
The Swiss franc also strengthened against the dollar to as high as 1.0795 franc and 1.5211 franc per euro on speculation traders were testing the central bank’s resolve to keep its currency weaker. Earlier in the week, there was rumour that SNB intervened in the forex market by selling its currency twice.  
 
In European morning, the People’s Bank of China said the International Monetary Fund should manage more of members’ foreign-exchange reserves. People’s Bank Governor Zhou Xiaochuan urged the IMF to expand the functions of its unit of account and move toward a ‘super-sovereign reserve currency’. The greenback fell across the board by these comments and lost 0.9 percent to 95.21 vs the yen, dollar headed for a 1.2 percent weekly decline, its third consecutive drop.  
 
Economic data coming out next week include :  
 
Trade balance and import/export figures of New Zealand, industrial production and retail sales of Japan, business climate and economic sentiment of U.K on Monday; Gfk survey of U.K., unemployment rate and housing starts of Japan, unemployment rate of Germany, HICP of Eurozone, Current account and GDP of U.K., GDP and PPI of Canada, Chicago PMI and consumer confidence of U.S. on Tuesday; Tankan big manufacturing and Tankan capex of Japan, Retail sales of Australia, manufacturing PMI of Germany, Halifax house prices and manufacturing PMI of U.K., ADP employment, construction spending, ISM manufacturing and pending home sales of U.S. on Wednesday; Trade balance of Australia, PPI and unemployment rate of Eurozone, average hourly earnings, jobless claims, factory orders, non-form payrolls and unemployment rate of U.S. on Thursday; CPI of Switzerland, service PMI of Eurozone and U.K. and retail sales of Eurozone on Friday; ECB will announce the rate decision on Thursday. 

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