Forexpros — Last week saw the U.S. dollar plunge to a record low against the Swiss franc and a post-intervention low against the yen, as disappointing second quarter data on gross domestic product and uncertainty over a deal to raise the U.S. debt ceiling weighed.
On Friday, the Commerce Department said the U.S. economy grew at an annual rate of just 1.3% in the second quarter, falling short of expectations for growth of 1.7%. First quarter growth was revised sharply lower to 0.4%, down from 1.9%.
Meanwhile, with only days to go before an August 2 deadline to raise the U.S. debt ceiling, Congressional leaders and the White House had not reached a consensus that would avert a downgrade or default on the nation’s debt.
On Friday, U.S. President Barack Obama urged divided Republicans and Democrats to reach an agreement.
The yen remained supported against the greenback after Japan’s economy minister indicated intervention to weaken the yen was unlikely before the outcome of the U.S. deficit debate.
Elsewhere, sentiment on the euro remained weaker on Friday, amid fears over sovereign debt contagion, after Spain’s Aa2 rating was placed on review for possible downgrade by Moody’s and the country’s prime minister called early elections.
New Zealand’s dollar rallied to its highest level against the greenback since the currency was floated in 1985 after the Reserve Bank of New Zealand said it sees little need for the March 2011 “insurance cut” made in the benchmark interest rate after the February earthquake to remain in place much longer.
The Australian dollar also surged to a post-float high, boosted by prospects for higher interest rates after official data showed that consumer price inflation recorded the biggest annual increase since 2008 in the second quarter.
In the week ahead, the dollar looks likely to remain under pressure as investors await progress on a deal to raise the debt ceiling, while Friday’s non-farm payrolls will also be in focus.
Meanwhile, a post-policy meeting press conference by European Central Bank President Jean-Claude Trichet will be closely watched for insights into the region’s sovereign debt crisis and further signs of tightening by the bank.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, August 1
The euro zone is to publish official data on the unemployment rate, an important indicator of economic health. The U.K. is to produce data on manufacturing activity, a leading indicator of economic health.
In the U.S., the Institute of Supply Management is to publish data on manufacturing activity. Also Monday, markets in Switzerland, Canada and Australia are to remain closed for national holidays.
Tuesday, August 2
New Zealand is to produce government data on labor costs, a leading indicator of consumer inflation. Australia is to release official data on building approvals, an excellent gauge of future construction activity, as well as reports on house price inflation and commodity prices.
Meanwhile, the Reserve Bank of Australia is to announce its benchmark interest rate. The announcement will be followed by the bank’s rate statement, which gives important insights into the economic conditions that influenced the rate decision.
Japan is to publish official data on average cash earnings, which is closely correlated with consumer spending.
Later in the day, Switzerland is to publish government data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity. The country is also to publish data on manufacturing activity, a leading indicator of economic health, while the U.K. is to produce data on construction activity.
In addition, the U.S. is to publish official data on personal consumption expenditures and personal spending, which is linked to consumer inflation.
Wednesday, August 3
Australia is to publish official data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity, as well as data on the trade balance, the difference in value between imported and exported goods and services.
The U.K. is to publish government data on service sector activity, a leading indicator of economic health. Meanwhile, the euro zone is to produce official data on retail sales.
Later in the day, payroll processing firm ADP is publish a report on U.S. non-farm payrolls, which leads government data by two days. In addition, the Institute of Supply Management is to publish data on service sector growth, a leading indicator of economic health. The U.S. is also to publish data on factory orders and crude oil inventories.
Thursday, August 4
New Zealand is to release official data on employment change and the unemployment rate, a leading indicator of economic health.
In the euro zone, Germany is to produce official data on factory orders, a leading indicator of production. Later in the day, the ECB is to announce its benchmark interest rate. The announcement will be followed with a closely watched press conference to outline the factors affecting the decision.
Also Thursday, the Bank of England is to announce its benchmark interest rate, while the U.S. is to publish government data on initial jobless claims, a leading indicator of economic health.
Friday, August 5
The RBA is to publish its monetary policy statement, which gives valuable insights into the bank’s view of economic conditions and inflation. Meanwhile, the Bank of Japan is to announce its benchmark interest rate. The announcement will be followed with a closely watched press conference to outline the factors affecting the decision.
Switzerland is to produce government data on consumer price inflation, which accounts for a majority of overall inflation. In the euro zone, Germany is to release official data on industrial production, a leading indicator of economic health. Elsewhere, the U.K. is to publish official data on producer price inflation input, a leading indicator of consumer inflation.
Later in the day, Canada is to release government data on employment change and the unemployment rate, a leading indicator of economic health. The country is also to release official data on building permits, an excellent gauge of future construction activity, as well as the Ivey PMI.
The U.S. is to round up the week with government data on non-farm payrolls, as well as data on average hourly earnings and the unemployment rate.
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