Dollar ends weak on strong note as market news disappoints

the US dollar ended the week as the strongest of the majors largely due to increased risk aversion following the release of the disappointing market news.

Euro- the euro has a volatile week with a host of economic reports being released. However it ended the week almost unchanged from its usual range against the dollar. Forex options market showed that volatility expectations remained high ahead of ECB interest rate decision and the us nonfarm pay roll report, but sharp moves after the reports were incapable of pushing the euro below the 1.40 mark. The ECB had come under pressure to cut further rates with the organisation of economic corporation and development (OEDC) urging the bank to cut rates towards Zero, and to hold them at those levels going to 2010. However rates were left unchanged for the time being. Euro Zone confidence improved for the third month in June, but the European commission warned that problems still persists.

Sterling- sterling fell signficantly during the week from a high of 1.6746 as an increase in risk aversion and news that the first quarter GDP contraction was larger than expected at 2.4% its lower level since 1970's. Year on year GDP growth was revised down -4.9% , the lowest rate since record keeping begin in 1956. Dismal reports from the US also added to the bearing sentiments and spaked risk aversion. Sterling shot higher to start the week after showed house prices gained 0.9% in june, sparking hope that housing sector stablisation lead the way to a recovery range for this week($1.6299-$1.6744)

Yen- The japanese yen may continue strengthen against its major counterpart over the following week as market players curb their appetite for higher risk and the low yeilding currency should benefit from safe haven flows as investor weigh the outlook for global economic recovery. Data released last month showed that the tanka index of japanese sentiments rose from a reading of -58 in march to -48 in june. The index is widely followed because it is fairly correlated with Japanese GDP.

Data also suggested that economy has bound with industrial production rising for the third consecutive month in may while it is still down 30% relative to last year. production rose more than 14% from its all time low last February. Range this week( Yen 95.13- Yen 96.99