Forexpros – The euro ended the week lower against the U.S. dollar and the yen on Friday, as hopes for steps by the European Central Bank to stem the debt crisis in the euro zone dimmed, while weak economic data out of China fuelled concerns over the outlook for global growth, bolstering safe haven demand.
Data on Friday showed that Chinese exports grew just 1.0% on the year in July, down from the 11.3% gain seen in June, while imports rose 4.7% year-over-year, down from 6.3% in June.
The weak data stoked concerns over a slowdown in the world’s second largest economy and bolstered demand for the safe haven dollar and yen.
Earlier in the week, weaker-than-forecast German data underlined concerns over the impact of the long running debt crisis on the region’s largest economy.
On Thursday, the ECB said in its monthly bulletin that the economic outlook for the euro zone faced a number of downside risks, with financial market tensions and their potential impact on growth posing the key threats.
The ECB revised down its forecast for economic growth to 0.6% in 2013, down from 1% previously and forecast a 0.3% contraction in growth this year, slightly worse than its previous forecast of for a 0.2% contraction.
Meanwhile, optimism that the ECB will soon move to cut high Spanish and Italian borrowing costs faded as investors waited for more details of the bank’s proposed bond buying program to emerge.
The euro ended the week close to one-week lows against the dollar and the yen, with EUR/USD slipping 0.13% on Friday, to settle at 1.2287 and EUR/JPY was down 0.53% to 96.15.
The pound ended the week higher against the dollar, after Bank of England Governor Mervyn King indicated that the bank was unlikely to cut rates in the coming months, saying it would damage some financial institutions.
However, the outlook for sterling deteriorated after the BoE said that the U.K. economy would barely grow this year and cut its forecasts for the coming years in its quarterly inflation report.
The Canadian dollar shrugged off weaker-than-expected employment data on Friday, as gains in crude oil, the country’s largest export, pushed the currency to a three-month high against the greenback.
The Australian dollar ended the week close to four-month highs against the greenback and all-time highs against the euro, after the Reserve Bank of Australia raised its 2012 growth forecast on stronger-than-expected consumer demand.
The RBA also warned that the stronger Australian dollar could prove more of a drag on the economy than in the past.
In the week ahead, market participants will be awaiting data on second quarter growth from the euro zone and looking ahead to central bank minutes from the Bank of Japan and the BoE, amid ongoing speculation that world central banks may take steps to shore up economic growth.
Investors will also watching U.S. data on retail sales, inflation and housing in an attempt to assess the strength of the U.S. economic recovery.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, August 13
Japan is to release preliminary data on second quarter gross domestic product, which is the broadest measure of economic activity and the primary gauge of the economy’s health.
Tuesday, August 14
New Zealand is to publish official data on retail sales, the primary gauge of consumer spending, while Australia is to produce a report on business confidence, followed by official data on new motor vehicle sales.
The BoJ is to produce the minutes of its most recent policy-setting meeting, which will be closely watched for signs that the central bank is leaning towards further monetary easing. Japan is also to release government data on tertiary industry activity, a key indicator of economic health.
The U.K. is to publish official data on consumer price inflation, which accounts for the majority of overall inflation, as well as industry data on house price inflation, a key gauge of demand in the housing sector.
Switzerland is to release official data on producer price inflation, an important indicator of consumer inflation.
The euro zone is to release official data on industrial production as well as preliminary data on second quarter GDP, while Germany and France are also to release individual GDP reports. In addition, the ZEW Centre for Economic Research is to publish a report on economic sentiment in Germany and throughout the single currency bloc.
Later Tuesday, the U.S. is to publish official data on retail sales and producer price inflation, followed by data on business inventories.
Wednesday, August 15
Australia is to release by official data on wage price inflation, as well as a report on consumer sentiment, a leading indicator of consumer spending.
In the euro zone, markets in France and Italy are to remain closed due to national holidays.
The U.K. is to publish official data on claimant count change and the unemployment rate, while the BoE is to produce the minutes of its August policy meeting, which will be closely watched for indications that policymakers are considering further easing measures.
The U.S. is to release official data on consumer price inflation, as well as a report on manufacturing activity in the New York area and government data on net long term securities transactions. The Federal Reserve is also to produce data on the capacity utilization rate and industrial production, followed by a government report on crude oil inventories.
Thursday, August 16
Australia is to publish a report on inflation expectations, which can indicate the future path of consumer inflation.
The euro zone is to produce official data on consumer price inflation, which accounts for the majority of overall inflation.
Elsewhere in Europe, the U.K. is to release official data on retail sales, while Switzerland is to produce a ZEW report on economic expectations, a leading indicator of economic health.
Later in the day, Canada is to produce official data on foreign securities purchases and on manufacturing sales, a key indicator of economic health.
The U.S. is to publish official data on building permits, a key gauge of future construction activity, as well as weekly government data on unemployment claims. The country is also to release official data on housing starts and a report on manufacturing activity in the Philadelphia area.
Friday, August 17
New Zealand is to produce official data on producer price inflation input, a leading indicator of consumer inflation.
In the euro zone, the ECB is to release data on the current account, while Germany is to publish official data on producer price inflation.
Later in the day, Canada is to release official data on consumer price inflation.
The U.S. is to round up the week with a preliminary report by the University of Michigan on consumer sentiment and inflation expectations.
Forexpros
