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During early deals on Friday, the US dollar plunged to new multi-month lows against its Swiss, European and Japanese counterparts as a stronger than expected Chinese data added to economic recovery hopes, prompting investors to keep shifting funds to riskier and growth-linked currencies and thus reducing demand for the safe-haven greenback.
The dollar dropped to a 1-month low against the British pound, one-year trough versus the New Zealand dollar and a 2-day low versus its Australian and Canadian counterparts.
China's economy was firmly on the recovery track, a slew of economic data released by the National Bureau of Statistics today showed. The economic indicators showed an improvement in August, with industrial production, retail sales and urban investment in fixed assets all improving, while consumer and producer prices declined at a slower annual rate.
Asian markets were mostly trading higher today with the overnight positive close on Wall Street on the back of a better-than-expected weekly jobless claims report aiding sentiment to a notable extent. Though gains are not well pronounced, the mood is fairly positive in most of the markets in the region. The Japanese market, however, was seen struggling for support.
The U.S. Labor Department revealed yesterday that initial jobless claims came in at 550,000 for the week ended September 5th, which was down 26,000 from the previous week's revised total of 576,000. Economists had expected jobless claims to come in at around 560,000.
Continuing claims, which measure the number of people receiving ongoing unemployment help, fell 159,000 to 6.088 million in the week ended August 29th.
Against the European currency, the US dollar edged down to 1.4620 during early deals on Friday. This set the lowest mark for the dollar since December 18, 2008. The next downside target level for the dollar is seen around 1.457. The euro-dollar pair closed Thursday's deals at 1.4583.
The dollar that reached a 13-day high of 1.4179 against the euro on September 1 weakened thereafter and has lost around 3% thus far.
The US currency that closed Thursday's North American session at 1.6653 against the British pound declined to a 1-month low of 1.6712 during today's early deals. If the US dollar falls further, 1.690 is seen as the next target level.
The US dollar that rose to a new multi-week high of 1.6116 against the pound on September 2 has lost around 4% since then.
Yesterday, the Bank of England decided to maintain its interest rate for the sixth consecutive month at 0.5% and also voted to continue the GBP 175 billion asset purchase programme using central bank reserves.
Against the Swiss franc, the greenback traded down during Friday's early Asian trading. At 12:35 am ET, the dollar-franc pair declined to 1.0356, its lowest point since July 29, 2008. The pair is currently trading at 1.0365 with 1.017 seen as the next target level. The dollar-franc pair closed yesterday's deals at 1.0387.
The US currency has lost around 3.2% against the franc after hitting a 3-day high of 1.0701 on September 4.
The US dollar plunged to 91.23 against the Japanese yen during early deals on Friday. This set the lowest point for the pair since February 13, 2009. On the downside, 90.2 is seen as the next target level for the U.S. currency. The dollar-yen pair closed Thursday's New York deals at 91.75.
The dollar-yen pair that climbed to a 6-day high of 93.31 on September 7 has depreciated around 2% since then.
Japan's economy grew in the April-to-June quarter, but not by as much as originally reported, a government report showed today.
Japan's gross domestic product increased 0.6 percent from the preceding quarter or 2.3 percent in annualized terms. The growth reported by the Cabinet office was below the preliminary estimate of 0.9 percent on-quarter growth and 3.7 percent annualized growth.
A monthly survey from the Cabinet Office showed that Japanese consumer confidence rose to 40.4 in August from 39.7 in July. The index also stood above the expected reading of 40.2. Meanwhile, household's consumer confidence for August was 40.1, up from 39.4 in July. Economists were expecting a reading of 40.5 in August.
The greenback tumbled to a 2-day low of 0.8652 against the Australian currency and 1.0755 versus the Canadian dollar during early deals on Friday. The next downside target level for the U.S. currency is seen around 0.881 against the aussie and 1.072 against the loonie. The U.S. dollar closed Thursday's deals at 0.8642 against the aussie and 1.0774 versus the loonie.
Against the NZ dollar, the US dollar plunged to 0.7051 during Friday's early deals. This set the lowest point for the greenback since August 29, 2008. If the U.S. dollar falls further, 0.721 is seen as the next target level. The kiwi-dollar pair closed Thursday's New York deals at 0.7044.
Statistics NZ reported today that food prices decreased 0.9 percent compared to July, led by lower prices for grocery foods, fruits and vegetables. For the year to August 2009, food prices increased 4.6 percent, the smallest on-year increase since January 2008.
At 4.00am ET, Italian industrial output details are due. Industrial production is expected to rise 0.4% month-on-month in July compared to a 1.2% fall in June. After declining 21.9% in June, economists forecast 21% annual fall in July.
At 4.30am ET, the Office for National Statistics is slated to issue UK producer prices data for August. Input prices are forecast to rise 1% month-on-month in August versus 1.4% fall in July. Annually, input prices are expected to drop 8.4%. Meanwhile, monthly growth in output prices are expected at 0.3%.
Turning to the U.S., the Department of Commerce will release its import and export price reports for August at 8:30 am ET.
At 10:00 am ET, the Commerce Department is due to release its wholesale inventories report. Economists expect wholesale inventories at the end of July to show a 0.1% decline.
The preliminary reading of the University of Michigan's consumer sentiment index for September is due to be released at the same time. The report is expected to show that the consumer sentiment index rose to 67.5 in the month.
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