By Joseph Adinolfi, MarketWatch , Hiroyuki Kachi
Canadian dollar finishes the week higher
The U.S. dollar finished the week 2.1% lower against the euro on
Friday, its largest weekly loss against the single currency in four
weeks, as a bevy of weak U.S. economic data caused traders to
rethink the timing of what would be the first increase to the fed
funds rate since 2006.
The euro (EURUSD) traded at $1.0809, compared with $1.0769
Thursday. The dollar (USDJPY) also recorded its largest weekly
decline against the yen in four weeks, trading at Yen118.90 yen
Friday afternoon, compared with Yen118.98 late Thursday in New
York.
The dollar had declined for three straight weeks before
finishing higher last week.
The Labor Department said Friday that core consumer prices rose
0.2% in March on the back of higher gas prices, matching
expectations of economists polled by MarketWatch. Core prices
increased by the same amount in February.
Read: Consumer prices move up in March for second month
(http://www.marketwatch.com/story/consumer-prices-move-up-in-march-for-second-month-2015-04-17)
Aside from Friday's gauge of consumer-price inflation, U.S.
economic data released this week has been disappointing, weighing
on the dollar and suggesting that the Federal Reserve will hold off
at least until the third quarter of 2015 to raise the fed-funds
rate, its benchmark interest rate
Greece's Kathimerini newspaper reported Friday that central
banks of Southeastern European countries have told subsidiaries of
Greek lenders operating in their countries to exit all exposure to
Greek sovereign debt, which the market interpreted as a sign that a
Greek default is imminent.
Read: Greek banks abroad shed Greek bonds on default fears
(http://www.marketwatch.com/story/greek-banks-abroad-shed-greek-bonds-on-default-fears-report-2015-04-17)
Sebastien Galy, director of FX strategy at Société Générale,
said that Greek default fears were driving investors into the
dollar.
"The [CPI] data itself was a little mixed," Galy said. "To be
frank, really what you're seeing here is risk reduction linked to
Greece."
The dollar's strength was part of a broader trend of investors
dumping risk assets like stocks, Galy said. Stocks traded lower
around the world, and emerging-market currencies like the Mexican
peso (MXNUSD) sold off, as investors sought the perceived safety of
the U.S. dollar and the Swiss franc (EURCHF).
Read: European stocks drop further, heading for sharp weekly
loss
(http://www.marketwatch.com/story/european-stocks-head-lower-on-track-for-weekly-loss-2015-04-17)
Elsewhere, the Canadian dollar rallied against its U.S.
counterpart after retail sales for February and the March
consumer-price index was better than economists' expectations.
The Canadian currency finished the week higher against the buck
after two weeks of losses, gaining 2.7% against the dollar this
week after crude-oil prices stabilized and Bank of Canada policy
makers said that the negative impact of weakening oil prices would
be less severe than they had initially believed.
The loonie (CADUSD) traded at 81.69 cents, its highest level in
nearly three months, compared with 81.97 cents Thursday.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires