The US Dollar (USD) remained under significant selling pressure on Friday, with the USD Index falling to its lowest level in over two weeks, dipping below the 106.00 threshold. Market participants turned their attention to a light US economic calendar, with no major data releases expected and US financial markets closing early. Focus shifted to European and Canadian economic reports, including the Eurozone’s Harmonized Index of Consumer Prices (HICP) and Canada’s third-quarter Gross Domestic Product (GDP) data.
Following the Thanksgiving Day holiday, US stock index futures showed early gains, while the benchmark 10-year US Treasury bond yield continued its downward trajectory, nearing 4.2%. This decline in bond yields put additional pressure on the USD, making it harder for the currency to attract demand.
Tokyo CPI Boosts Yen, USD/JPY Slides
During the Asian trading session, Japan’s latest economic data showed a sharp rise in the Tokyo Consumer Price Index (CPI), which surged 2.6% year-on-year in November, up from the 1.8% increase seen in October. Other figures revealed that Japan’s Unemployment Rate edged up to 2.5% in October from 2.4%, while Industrial Production showed a contraction of 2.6% on an annual basis.
The USD/JPY pair, which had posted small gains earlier in the week, turned negative early Friday. By the European morning, it was trading near 150.00, marking its lowest level since late October and losing about 1% on the day. The Yen benefited from the combination of stronger inflation data and ongoing market uncertainty.
EUR/USD and GBP/USD Find Support
In Europe, the EUR/USD pair took advantage of the USD weakness, rising toward the 1.0600 mark. German Consumer Price Index (CPI) data released Thursday showed a monthly decline of 0.2% in November, in line with market expectations. This provided further support for the Euro against the Dollar.
Meanwhile, the GBP/USD pair also gained traction, trading in positive territory above 1.2700. The British Pound remained on course to break an eight-week losing streak, bolstered by the broader weakness of the US Dollar.
Canadian Economy, Gold Prices in Focus
In Canada, GDP growth is forecast to slow to 1% on an annual basis in the third quarter, down from 2.1% in the previous quarter. The USD/CAD pair, after showing strength earlier in the week, extended its losses on Friday, trading below the 1.4000 level.
Gold prices also benefitted from the retreating US Treasury bond yields, with the precious metal gaining about 1% on the day to trade above $2,660 in the European morning, as investors flocked to safe-haven assets.
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