By CountingPips.com
The U.S. dollar and Japanese yen surged higher in forex trading against most of the other major currencies on Friday as risk aversion dictated the direction of the markets. The dollar made gains against the euro, British pound, Canadian dollar, Australian dollar, New Zealand dollar and the Swiss franc while the American currency declined against the Japanese yen. The Japanese yen, meanwhile, gained ground versus the euro, US dollar, British pound, Canadian dollar, 
Australian dollar, New Zealand dollar and the Swiss franc.
The U.S. stock markets had a negative session on Friday with the Dow registering its first 100-point losing day of 2010 by falling 100.90 points. The Nasdaq decreased by 28.75 points while the S&P 500 dropped by 12.43 points. Friday’s losses brought all three stock markets into negative territory for the week.
On the week as a whole in the forex markets, Friday’s dollar strength helped the currency finish mixed against the other majors. The dollar gained versus the euro for the week despite the EUR/USD making a more than three week high at the 1.4579 level before retreating. The dollar also increased for the week versus the Swiss franc and Australian dollar while falling versus the Japanese yen, British pound, Canadian dollar and New Zealand dollar (see chart).
Friday’s economic news releases showed that U.S. consumer prices edged up by 0.1 percent in December following a 0.4 percent rise in November. This release was just below the forecasts expecting a 0.2 percent uptick. The core reading, minus volatile food and energy prices, also rose by just 0.1 percent in December to match forecasts and follows a flat reading in November.
Manufacturing data out of New York increased more than expected to show that manufacturing conditions improved for the sixth straight month. The Empire Manufacturing Survey for January increased by 11 points to 15.9 from December’s revised 4.50 score. This release beat expectations of an approximate 12.00 reading.
The joint consumer sentiment survey from the University of Michigan and Reuters edged up in January to 72.8 from a score of 72.5 in December. This index, which according to Bloomberg news averaged a 66.3 score last year, failed to surpass expectations which were calling for a 74.0 reading.
Next week’s economic releases include the Canadian interest rate decision, the Bank of England Policy Meeting Minutes, US housing data and retail sales data from the U.K., Canada and New Zealand.
See our economic calendar for a full listing.
