The dollar has dropped sharply in comparison to the Euro at the end of the trading week, but is little changed against the pound sterling. The dollar has also added to its recent strength against the Japanese Yen.
The European Central Bank announced on Friday that banks next week will make more-than-forecast repayments of the three-year emergency aid provided to them in late 2011.
According to the central bank, 278 financial institutions will return EUR 137.2 billion in 3-year loans at the first opportunity, which is on January 30. Economists had expected repayments in the range of EUR 60 billion to EUR 100 billion. In December 2011, a total 523 banks took EUR 489 billion in three-year loans.
The ECB had provided three-year loans to banks under a facility known as long-term refinancing operations or LTROs. The bank had carried out the first LTRO in December 2011 and a second one in February 2012, giving out more than EUR 1 trillion in total.
The Eurozone economy is set to start recovering in the second half of this year, though the positive contagion on financial markets has not yet started reflecting on the wider European market, European Central Bank president Mario Draghi said on Friday.
Addressing the World Economic Forum in Davos, Draghi said that 2013 started with economic conditions showing a marked improvement, and financial markets experiencing a “relative tranquility”.
The ECB chief, however, warned that the region’s economic troubles are far from over, and much needs to be done to sustain the growth momentum as the current stabilization is at very low levels.
The dollar has extended yesterday’s weakness against the Euro on Friday and has dropped to an 11-month low of $1.3478.
Eurocoin, an indicator of economic climate in the euro area, improved slightly for the second straight month in January, but remained in the negative territory, data from a survey by Bank of Italy and the Center for Economic Policy Research showed Friday.
The eurocoin indicator, designed to measure the current economic situation in the Eurozone, climbed to -0.23 percent in January from -0.27 percent in December. The latest figure is the highest since June 2012. In November, the reading was -0.29 percent.
Sentiment among German businesses improved more than forecast in January to its highest level since June last year with the domestic economic prospects brightening amid signs of debt crisis in the euro area abating.
A survey by the Ifo Institute revealed Friday that the headline business climate index rose to a seven-month high of 104.2 in January from 102.4 in December. The reading was forecast to increase to 103. The survey found that the sentiment has improved for a third consecutive month.
New orders received by German construction firms decreased from last year in November, data released by the Federal Statistical Office showed Friday.
Overall construction orders declined 8.3 percent on an annual basis in November. Demand for building construction dropped 7.8 percent from a year earlier, while orders of civil engineering works fell by 8.7 percent.
The greenback has pulled back slightly from around $1.5745 against the pound sterling on Friday, to around $1.5800.
The British economy contracted in the final three months of last year after third quarter’s modest recovery proved to be short-lived, adding to fears that the economy could be heading for a triple-dip recession, latest data showed Friday.
Gross domestic product declined 0.3 percent sequentially in the fourth quarter, reversing the 0.9 percent growth recorded in the previous three months, which was driven by a boost from increased activity during the Olympics. Economists were looking for a more modest decline of 0.1 percent in the fourth quarter.
U.K. services sector index rose more-than-expected during the three months ended November compared to the previous three months, data released by the Office of National Statistics showed on Friday.
The seasonally adjusted index of services rose 0.6 percent during three months ended November from the previous three months. Economists had forecast the growth to be 0.5 percent during the period.
The buck rebounded from a low of Y88.050 against the Japanese Yen on Wednesday and has since continued to rise. The U.S. currency climbed to over a 31-month high of Y91.186 on Friday.
Core consumer prices in Japan were down -0.2 percent on year in December, the Ministry of Internal Affairs and Communications said on Friday – matching forecasts after easing 0.1 percent in November.
Overall CPI was down 0.1 percent on year versus forecasts for -0.2 percent, which would have been unchanged. On month, core CPI was down 0.1 percent and overall inflation was flat.
New home sales in the U.S. unexpectedly decreased in the month of December, according to a report released by the Commerce Department on Friday, although the report strikes a rare negative note following a recent string of upbeat housing data.
The report showed that new home sales fell 7.3 percent to a seasonally adjusted annual rate of 369,000 in December from the revised November rate of 398,000. While the drop came as a surprise to economists, the unexpected decrease came from a November level that was significantly upwardly revised.
Economists had expected new home sales to climb to 388,000 from the 377,000 originally reported for the previous month.