The dollar has bounced back slightly against its major European competitors on Friday, but has remained basically flat compared to the Japanese Yen. The dollar has recovered some ground after investor hopes for further U.S. economic stimulus faded, following comments made by James Bullard.
St. Louis Fed President James Bullard stated that current economic conditions weren't weak enough to justify another round of stimulus. Bullard also said he would oppose any new program by the Fed to buy bonds to reduce borrowing costs.
As stimulus hopes fade, investors will look forward to Fed Chairman Ben Bernanke's speech on August 31 at the Kansas City Federal Reserve Bank's annual symposium in Jackson Hole for further directional cues.
German Chancellor Angela Merkel on Friday reiterated her support for Greece, saying she wanted the debt-ridden country to remain in Eurozone. Following a meeting with Greek Prime Minister Antonis Samaras in Berlin, Merkel said Germany would wait till the troika report is released next month to assess the efforts undertaken by the Greek government to meet its fiscal targets.
"I am deeply convinced that the new government under the leadership of Prime Minister Samaras will do everything possible to solve the problems in Greece," Merkel said. It is a difficult path for Greece and Germany has always said that it will support Greece, she added.
The Greek leader is set to meet with French President Francois Hollande on Saturday.
The dollar has bounced back from Thursday's low of $1.2588 versus the Euro on Friday, to around $1.2530.
Bank of England policymaker Martin Weale said he would prefer interest rate reduction to more quantitative easing. In an interview with The Herald on Friday, he said, "I am very comfortable with the view that we need to establish whether the effects of an interest rate reduction would be positive before we might do it."
The greenback has extended yesterday's recovery against the pound sterling on Friday, climbing back to around $1.5830, from Thursday's low of $1.5912.
The U.K. economy contracted less than initially estimated in the second quarter on smaller declines in construction and production sectors. Gross domestic product shrank 0.5 percent in the second quarter, revised upwards by 0.2 percentage points from the fall of 0.7 percent published on July 25, data from the Office for National Statistics showed Friday.
Output of the U.K. services sector declined sharply in June, following a rebound in the previous month, data released by the Office for National Statistics revealed Friday. The index of services dropped 1.7 percent from May, when it rose 0.9 percent. Economists had expected a 1.8 percent decline.
Bank of Japan Governor Masaaki Shirakawa on Friday reiterated his warning against prolonged gains in the yen, saying chronic upward pressure on the yen is placing downward pressure on Japan's economy.
"The central bank will do its utmost to ensure the stability of Japan's financial system while cooperating closely with other central banks," he said during a speech at a meeting with business leaders in Osaka.
The buck has continued to trade basically flat in comparison to the Yen on Friday, holding steady around Y78.650.
Strength in the volatile transportation sector powered another increase in U.S. durable goods orders in July, marking the third consecutive month of growth. According to figures released Friday by the Commerce Department, new orders for durable goods came in at $230.7 billion in July, a 4.2 percent increase from June levels.
The increase was much stronger than economists had expected, with most forecasting an increase of 1.9 percent, much closer to the 1.6 percent growth seen in July.
by RTT Staff Writer
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