Weekend Economists Visit Borinquen, La Isla del Encanto May 15-17, 2015

[Demeter]

14. Dollar weakens against the euro for the 5th straight week

http://www.marketwatch.com/story/dollar-threatens-5th-straight-week-of-weakness-against-euro-2015-05-15?siteid=YAHOOB

The dollar depreciated against the euro for a fifth straight week on Friday, as weak U.S. economic data prompted traders to push back their expectations for when the Federal Reserve will raise interest rates.

A preliminary reading of consumer sentiment in May by the University of Michigan came in at 88.6, down from 95.9 in April — a seven-year low. That, combined with a disappointing result for the May Empire State manufacturing index and the Federal Reserve’s April reading on industrial-production activity pushed the dollar 0.3% lower against the euro Friday. The data showed that the second-quarter rebound that many economists, including Federal Reserve policy makers, had hoped for has yet to fully materialize.

“It’s not the huge rally we had [in the second quarter] last year,” said Colin Cieszynski, chief markets strategist at CMC Markets.

The euro EURUSD, +0.3418% traded at $1.1446, a three-month high, compared with $1.1400 Thursday; the pound GBPUSD, -0.3169% traded at $1.5725, compared with $1.5774 Thursday; the dollar USDJPY, +0.09% traded at ¥119.38, compared with ¥119.21.

The ICE U.S. Dollar Index DXY, -0.17% a measure of the dollar’s strength against a basket of six rivals, was down 0.2% to 93.2710.

Earlier in the week, a retail-sales report showed that consumer spending was flat in April.

Rate-hike expectations have shifted dramatically this year, said Kathy Lien, managing director of FX Strategy at BK Asset Management. The futures market is now pricing in a greater than 50% probability that the central bank will raise interest rates in December for the first time since 2006, compared with September. ...MORE