• Dollar Rises Against Majors Ahead of the Weekend
• Euro-zone Comments Remain Hawkish
• Yen Weakens on Rate Speculation, Timetable Remains Undefined

US Dollar
Still in consolidation, the U.S. single currency gained against the majors on the session as commodity prices continued to pullback from record highs.  Further bolstering dollar gains on the session were comments by US Treasury Secretary John Snow at an afternoon convention.  Speaking at the Bond Market Association meetings in New York today, Secretary Snow made note that growth prospects remained underpinned in the world's largest economy for the moment.  Noting that expansion looked to pullback from the 4.8 percent first quarter estimates, he did indicate gross domestic product looked to be "well into the 3s" for the second quarter.  Although providing a momentary uplift to the US single currency, the statements remain repetitive as economic data has already offered up suggestions of continued expansion in the country.  The Secretary subsequently commented on China noting that pressure should still be applied to a more flexible yuan valuation given current decisions have remained "inadequate".  Additionally, gold markets reflected dollar optimism as traders pared back positions on the immediate pullback.  For the day, after initially dropping 0.4 percent, COMEX gold contracts have plunged 3.4 percent as copper and silver contracts continue their downtrend.  However, greenback strength may be short-lived as data next week is expected to show continued weakness in durable goods and consumer confidence reports lending the greenback some continued longer term weakness.

Euro
European data was slightly less than stellar adding to some interim Euro weakness on the session.  However German producer prices did rise on the month and contributed to some Euro supportive trading heading into the afternoon close.  In April, prices at the wholesale level rose 1 percent versus expectations of a climb of 0.7 percent.  Subsequently, the annualized jump of 6.1 percent was the fastest increase in 24 years and remains supportive of interest rate hikes by the European Central Bank in the near term as energy prices continue to bolster inflationary pressures.  Adding to the economic data were comments by Governing Council member Klaus Liebscher.  According to the Austrian central bank head, there remains big upside inflationary risks as the euro zone economy continues to strengthen.  Expecting the near term decision to be by 25 basis points, sentiment has sided with a potential increase of as much as 50 basis points at the next meeting as policy makers continue to be preemptive.  Subsequent data remained in line with consensus forecasts, deducting from any momentous pickup for the single currency.  French gross domestic product rose 1.5 percent in the first quarter while Italian industrial sales improvement offset declines in industrial orders for March.  Ultimately, with market participants largely concentrated on interest rates and a widening dollar deficit, today's comments may add to the further bid tone as the ECB President continues to exercise "strong vigilance" in keeping price increases at bay.

British Pound
Inflationary suggestions were witnessed through the overnight's report regarding money supply in the United Kingdom as public sector net borrowing declined 1.4 billion pounds in the month of April, lending to a narrower government deficit.  Robust mortgage lending figures additionally should have underpinned pound strength, however, on the session the underlying spot broke through in favor of the greenback initially.  Heading into the weekend close, the spot has climbed in favor of sterling bulls and should continue to do so next week as economic reports look to lend optimism in the near term for pound markets.  Consensus estimates for key reports continue to purport the turnaround seen in previous months with major improvements forecasted for the CBI industrial survey and total business investment.  Subsequently, housing prices are expected to remain buoyed for May in addition to supported business sentiment.  Both sets of data are expected to contribute to a positive gross domestic product report and rising speculation of sustained interest rates. 

Japanese Yen
The Japanese yen remained under pressure today rising above the 111.50 figure as subsequent comments issued by Bank of Japan Governor Toshihiko Fukui dampened sentiment of  a near term end to zero interest rate policy in the world's second largest economy.  Following the central bank's monthly meeting, Fukui sated that the end of the current zero interest rate policy was not specifically discussed during the meeting as the definitive end remains undetermined.  Bearish momentum was additionally bolstered by subsequent comments by Chief Cabinet Secretary Shinzo Abe.  Secretary Abe called for the BOJ to refrain from any notions of policy tightening at the moment as he requested that both entities work together to "make sure we depart from deflation."  With most of the recent spot strength being attributed to increasing speculation of the aforementioned, it's no surprise that the underlying yen lost on the day.  Nonetheless, strength continues to be to the upside for the economy as gross domestic product for the quarter was slightly better than expected.  Rising to by a 1.9 percent clip, the growth measure expanded above the 1.1 percent consensus estimated.

Kathy Lien is the Chief Currency Strategist at FXCM.