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Forex - Dollar drops on talk of central bank action, U.S. data

Published 06/15/2012, 03:35 PM
Updated 06/15/2012, 03:37 PM
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Investing.com - The dollar fell against most major world currencies on Friday amid talk that central banks around the world are ready to bolster global financial should a Greek exit occur and seriously rattle markets.

Disappointing U.S. industrial production and consumer sentiment data also pushed the greenback down on sentiment the Federal Reserve may take action at home to spur recovery.

In U.S. trading on Friday, EUR/USD was trading up 0.08% at 1.2644.

Weak jobs figures and an escalating European debt crisis are taking its toll on the U.S. consumer.

The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment fell to 74.1 in June from to 79.3 in May, Reuters reports.

The number fell short of a 77.5 reading predicted by a Reuters poll of economists.

Consumer spending drives 70 percent of the U.S. economy, and the disappointing numbers cemented some market expectations that the Federal Reserve will take steps soon to stimulate the economy, which would weaken the dollar.

The Federal Reserve, meanwhile, reported that industrial production, which includes output from the nation's factories, mines and utilities, contracted 0.1% in May from 1.0% in April, whose figure was revised down from 1.1%.

Market forecasts called for a gain of 0.1%.

The dollar fell on widespread market talk that central banks worldwide will take coordinated steps to shield the economy from a possible Greek exit from the eurozone, including possible liquidity injections, should the need arise.

Greece will hold elections on Sunday, and a strong showing among leftwing Syriza politicians could open the door to a Greek exit from the eurozone down the road.

The greenback was down against the pound, with GBP/USD up 0.79% and trading at 1.5687.

The U.S. currency was down against the yen, with USD/JPY trading down 0.83% at 78.69, and down against the Swiss franc, with USD/CHF trading down 0.09% at 0.9498.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.01% at 1.0227, AUD/USD up 0.62% at 1.0088 and NZD/USD up 0.96% at 0.7901.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.33% at 81.91.

Markets will digest the outcome of the Greek elections next week.

On Tuesday of next week, the Federal Reserve begins its monetary policy meeting.







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