Forex Review – Dollar weakness lifts euro and commodities

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Dollar showed weakness going into the U.S. trading session, declining against the euro and growth currencies like the aussie and kiwi, though flat against the CAD dollar, which was affected by CPI data.

EURUSD hit a three-week high of 1.3292 in European trading but hovered close to those levels in the North American session, supported above 1.3255.  This was a big recovery from lows of 1.3132 touched on Thursday when the single currency was pressured by European and global growth concerns after weak PMI’s.

Sterling also managed to claw back losses from Thursday after being weighed by weak UK retail sales. GBPUSD moved higher on Friday, hitting as high as 1.5907 in European hours and 1.5886 in the New York session.

USDJPY dropped sharply following weaker than expected numbers for U.S. new home sales this afternoon. Sales dipped 1.6 percent in February, to a seasonally adjusted 313,000, from a slightly downwardly revised 318,000 in January. Expectations were for improving sales, at a 330,000 annual rate. USDJPY fell to lows of 81.96, the lowest in two weeks.

EURJPY quickly recovered against the yen after briefly dipping following the disappointing US new home sales data, bouncing from 108.92 to 109.49, to end higher than the previous day.

USDCHF marked its second straight weekly loss, touching a three-week low of 0.9065 in the European session, little changed in the US session. The dollar is off about 0.8 percent against the Swiss franc this week, adding to a loss of about half a percent in the previous week.

AUDUSD bounced to 1.0474 from a session low of 1.0370, to end higher than Thursday when the growth-sensitive aussie dollar was slammed by weak Chinese PMI data, causing investors to fret over economic growth. China is a major export partner for Australia.

The Canadian dollar struggled to gain against its US counterpart, despite a broadly weaker greenback. The loonie was hurt by higher than expected Canadian inflation data. USDCAD shot up to a four-week high of 1.0032 before easing slightly to 0.9978.

Weakness in the US dollar made USD-denominated commodities such as gold more attractive for holders of other currencies, contributing to gains as well as to strength across a broad spectrum of commodities Friday. Spot gold rose to $1,662.15 from a New York session low of $1,646.01, and recovering all losses for the week.

Crude oil recovered all losses from Thursday, spiking up to $108.22 in New York trading on concerns about global supplies following a Reuters report of a sharp drop in Iranian oil exports.