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Dollar falls on European data, geopolitical concerns

ForexAug 08, 2014 03:10PM ET
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Dollar slides as market digests unfolding events in Iraq, Ukraine

Investing.com - Upbeat industrial production figures out of France coupled with geopolitical pressures stemming from airstrikes in Iraq and Russia's backing off in Ukraine weakened the dollar on Friday.

In U.S. trading on Friday, EUR/USD was up 0.35% at 1.3410.

Earlier Friday, data revealed that French industrial production rose 1.3% in June, exceeding expectations for a 1.0% gain, after a decline of 1.6% in May, whose figure was revised from a previously estimated 2.3% drop, which gave the euro an edge over the dollar.

Elsewhere, Germany's trade surplus narrowed to €16.2 billion in June from €18.8 billion in May.

Analysts had expected the trade surplus to narrow to €17.5 billion in June.

The data gave the euro strength over the greenback, which remained soft as investors digested rapidly unfolding events in Ukraine and Iraq.

Reuters, citing Russia's Interfax, reported earlier that Russia had ended its military exercises near the Ukrainian border, while in the U.S., President Barack Obama gave the go-ahead for air strikes in Iraq to halt a Sunni insurgency to protect Iraqi civilians from the uprising as well as U.S. personnel in Iraq.

The Iraqi government requested assistance, and gold fell on perceptions that U.S. airstrikes could stabilize the country even if temporarily.

Investors flocked to stocks on sentiments that a Russian decision to back off Ukraine coupled with hopes U.S. airstrikes will halt Iraq's insurgency will allow the global economy to continue with military conflicts disrupting commerce, thus giving investors room to sidestep the dollar on Friday for more risk-on asset classes.

The dollar was down against the yen, with USD/JPY down 0.02% at 102.07, and down against the Swiss franc, with USD/CHF down 0.38% at 0.9054.

At the conclusion of its monthly policy meeting, the Bank of Japan maintained its pledge to increase the monetary base at an annual pace of 60 trillion yen to 70 trillion yen, though geopolitical events largely guided trading on Friday.

The greenback was up against the pound, with GBP/USD down 0.33% at 1.6776.

Official data showed that the U.K. trade deficit widened to £9.41 billion in June from £9.15 billion in May, whose figure was revised from a previously estimated £9.20 billion. Analysts had expected the trade deficit to narrow to £8.80 billion in June.

The dollar was mixed against its counterparts in Canada, Australia and New Zealand, with USD/CAD up 0.44% at 1.0971, AUD/USD up 0.02% at 0.9276 and NZD/USD down 0.21% at 0.8459.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.18% at 81.45.

Dollar falls on European data, geopolitical concerns
 

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