Dollar was buoyed at the end of last week as risk appetite waned

The greeback pulled back from its sharp sell-off on Thursday, as weak US economic data spurred a return to risk aversion.

  • In early trading, the dollar continued to lose ground following the better-than-expected US growth data, however the GBP/USD rally was capped at 1.6600, and the UK currency pulled down steadily, eventually closing down 0.6% ay 1.6448.
  • US markets went through losses on Friday, with financials and materials leading the path, as risk aversion returned after Thursday’s optimism, strengthening support for the greenback.
  • On the macroeconomic front, data revealed that US consumer spending declined 0.5% in September, the largest decline since December 2008, further buoying the dollar rally.
  • Positive manufacturing data from the Midwest in the afternoon failed to dent dollar buying in the markets and traders acknowledged that part of this may have been due to month-end flows into the US currency related to foreign portfolios.
  • The US currency has continued to climb in trading this morning, currently half a percent up, as investors remain cautious ahead of big events this week, including interest rate decisions in the UK, eurozone and US.