The US dollar was down in early deals Friday as Spanish bailout chatters eased some of the fears concerning further aggravation of eurozone's debt crisis, which in turn enhanced some risk-buying.
The European Union officials have been in talks with the Spanish government over a bailout package, according to a report released by the Financial Times.
Investors will keep an eye on Italy after Mario Monti's government sharply slashed its growth forecast for the Eurozone's third largest economy this year to -2.4 percent from 1.2 percent contraction it had projected in April.
Meanwhile, the International Monetary Fund plans to cut its global growth forecast by "a few decimal points" as the global economy has weakened since the fund's last report, a senior IMF official was quoted as saying yesterday.
Bank of England Governor Mervyn King said yesterday that the U.K. is likely to experience a slow recovery, reports said citing his interview to Channel 4 television.
"I think the next quarter will probably be up. I think we're beginning to see a few signs now of a slow recovery, but it will be a slow recovery," he said.
King noted that the recovery will depend largely on the economic developments in Eurozone, that has cast a "black cloud of uncertainty" over the whole economy.
The dollar fell below the key 1.63 level against the dollar after a gap of nearly 5-months, falling to fresh 1-year low of 1.6311 around 5:00 am ET. Further selling pressure would probably help bears flexing their muscles and pulling the prices back below the 1.6450 support level.
The dollar also fell to session's lows of 0.9287 against the Swiss franc and 1.3049 against the euro around 5:00 am ET. Although the dollar recouped some of its losses against both of them, the recovery was not so solid and the technical picture looks bearish as greenback is heading towards re-testing key support levels in longer-time frames.
With no clear catalysts pulling the trigger to either direction, the US currency showed choppy trend against the yen and was trading in a narrow range of 78.28 and 78.14 in most of Friday's early deals.
Looking ahead, the market will focus to Atlanta Federal Reserve Bank President Dennis Lockhart who speaks to the Atlanta Institute of Internal Auditors on "U.S. Economic Outlook and Monetary Policy" at 12:40 pm ET.
by RTT Staff Writer
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