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Dollar Losing Ground At The End Of The Week

Dollar Losing Ground At The End Of The Week
12/14/2012 1:57 PM ET

The dollar declining against both the Euro and the pound sterling at the end of the trading week and is also down slightly against the Japanese Yen. U.S. industrial production showed a solid recovery from the effects of Superstorm Sandy, while consumer prices fell a bit more than expected.

Industrial production in the U.S. increased by much more than anticipated in the month of November, according to a report released by the Federal Reserve on Friday, with the increase reflecting a recovery in production for industries that were negatively affected by Hurricane Sandy.

The report said industrial production surged up by 1.1 percent in November after falling by a downwardly revised 0.7 percent in October. Economists had expected production to increase by 0.3 percent compared to the 0.4 percent drop originally reported for the previous month.

Consumer prices in the U.S. fell by a little more than expected in the month of November, according to a report released by the Labor Department on Friday, with the decrease in prices largely due to a sharp drop in energy prices.

The Labor Department said its consumer price index fell by 0.3 percent in November following a 0.1 percent increase in October. Economists had been expecting prices to edge down by 0.2 percent.

Fitch Ratings affirmed France's triple-A rating citing its stable political and social institutions and an exceptional financing flexibility. However, the rating agency maintained its negative outlook. The negative outlook is expected to be resolved during 2013 and indicates a slightly greater than 50% chance of a downgrade.

The dollar dropped below a range around the $1.3100 level against the Euro on Friday, to a 3-month low of $1.3172.

The downturn in Eurozone slowed in December as the German private sector returned to growth, while contractions in the rest of the region remain worrying, survey results from Markit Economics showed Friday. The composite Purchasing Managers' Index rose to a nine-month high of 47.3 in December from 46.5 in November.

Germany's private sector expanded in December after contracting for eight straight months, underpinned by service sector recovery, Markit Economics said Friday. The flash composite output index came in at 50.5 in December, an improvement on November's 49.2.

The downturn in French private sector output continued in December, but the rate of contraction slowed, flash survey data from Markit Economics showed Friday. The flash composite output index rose to 45, a 4-month high, from 44.3 in November.

Standard and Poor's on Thursday cut the outlook on Britain's triple-A credit rating to 'negative', citing risks emanating from weak economic growth and rising general government debt.

Revising the outlook on the unsolicited long-term ratings to 'negative' from 'stable', S&P said there is a one-in-three chance that Britain could lose its top rating within the next two years, if the country's economic and fiscal performances weaken beyond current expectations.

U.K. house prices are likely to rise 2 percent next year, and sales will grow to the highest since the market crashed in 2007, the Royal Institute of Chartered Surveyors' said in a report on Friday.

Home sales are forecast to climb by over 3 percent to 960,000 in 2013 from 930,000 this year. It estimates rents will increase by about 4 percent next year.

The greenback also dropped below a range around the $1.6130 level against the pound sterling on Friday, to a 2-month low of $1.6176.

The buck reached a 9-month high of Y83.951 early Friday, but has since pulled back to around Y83.450.

The Bank of Japan's quarterly Tankan survey revealed on Friday that sentiment for its large manufacturers' index plunged in the fourth quarter of 2012, showing a score of -12. That was worse than forecasts for a score of -10 after coming in at -3 in the third quarter.

The outlook for the next quarter also missed forecasts, coming with a score of -10 versus expectations for -9 after showing -3 in the previous three months.

Japan's industrial production grew by a revised 1.6 percent month-on-month in October, down from the initial estimate of 1.8 percent, final data from the Ministry of Economy, Trade and Industry showed Friday.

by RTT Staff Writer

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