Friday, March 15, 2013 4:04 pm
Dollar slips amid talk of easing Europe austerity
The Associated Press
Much of the economic news released during the day was positive. Government reports showed U.S. factory output increased, led by the auto industry, and inflation remained modest outside of a spike in gas prices. But preliminary data for March from The Thomson Reuters/University of Michigan index of consumer sentiment showed a surprising drop.
"This was the first negative surprise for the U.S. economy in more than a week, suggesting that some of the headwinds that the bears have been talking about are finally starting to materialize," said Boris Schlossberg, managing director for foreign exchange strategy at BK Asset Management, in a note. While he pointed out that the survey is not always an accurate gauge of consumer behavior, he said it does seem to indicate slowing consumer demand.
The euro was up to $1.3060, from $1.30 late Thursday. Even though the 27 European Union leaders meeting in Brussels failed to deliver any fundamental changes in economic strategy, talk there of the need to promote growth rather than just cut debt was seen as a positive sign. "European leaders are beginning to realize that a policy focused solely on austerity is failing miserably both an economic prescription and as a political stance," Schlossberg wrote.
The British pound slipped to $1.5078 late Friday, from $1.5081 the day before, reversing an earlier rally. Traders were responding to remarks from Bank of England Governor Mervyn King that signaled the central bank does not want to see further declines in the currency. The pound had been in retreat for several few weeks on expectations of another monetary stimulus from the central bank.
"While we don't think the pound will sustain these gains, we think that future declines could happen at a slower pace," wrote Kathleen Brooks, research director at Forex.com, especially if the government moves to address the weak British economy.
The dollar fell to 95.36 Japanese yen from 96.02 yen late Thursday. Haruhiko Kuroda is expected to assume leadership of the Bank of Japan next week after some question about whether he would be confirmed earlier in the week.
The dollar fell to 0.9392 Swiss franc from 0.9473 Swiss franc and to 1.0190 Canadian dollar from 1.0223 Canadian dollar.