Forexpros – The euro was lower against the U.S. dollar on Friday, hovering close to an eleven-month low as concerns over the debt crisis in the euro zone continued to dominate market sentiment.
Trading volumes were thin ahead of the Christmas holiday weekend, resulting in quiet trade.
Risk appetite briefly found support on Wednesday after an unprecedented EUR489.19 billion three-year loan by the European Central Bank.
Markets were hoping the move would avoid a credit crunch in the euro zone and help increase bond purchases of indebted euro zone countries. But the heavy demand from 523 European lenders underlined concerns over the scale of the financial crisis in the single currency bloc.
Investors were also jittery after official data showed on Thursday that the U.S. economy grew at a slower rate than initially estimated during the third quarter.
In a report, the Bureau of Economic Analysis said gross domestic product increased at a seasonally adjusted annual rate of 1.8% during the third quarter. The data primarily reflected a downward revision to personal consumption, which grew 1.6% compared to a previous estimate of 2.3%. Consumer spending typically accounts for nearly 70% of U.S. economic growth.
Meanwhile, a separate report showed that the number of people who filed for unemployment assistance in the U.S. last week fell unexpectedly to the lowest level since April 2008.
But the pound remained supported as the U.K.’s Office for National Statistics said that the country’s economy expanded 0.6% during the third quarter, up from a preliminary estimate of 0.5%.
Elsewhere, the Swiss franc remained under pressure as Swiss Finance Minister Eveline Widmer-Schlumpf said a panel from the government and the central bank is examining options such as capital controls and negative interest rates to curb the franc’s strength.
Earlier in the week, the Bank of Japan left its benchmark interest rate unchanged close to zero, but cut its view on the economy from November on mounting evidence of the effects of the euro zone’s debt crisis on global growth and Japan’s recovery prospects.
In the week ahead trading volumes are expected to remain light because many traders have closed books to lock in profit before the end of the year, reducing liquidity in the market and increasing the volatility.
Meanwhile, the U.S. is to release key reports on consumer confidence, jobless claims and home sales.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, December 26
Markets in the U.S., U.K., euro zone, Australia and New Zealand will be remaining closed for the Boxing Day holiday.
Tuesday, December 27
Markets in the U.K. and Canada will be remaining closed for a post-Christmas bank holiday.
The Bank of Japan is to publish the minutes of its most recent monetary policy meeting, which contain important insights into current economic conditions from the bank’s point of view. Japan is also to publish official data on housing starts.
In Switzerland, UBS bank is to publish its consumption indicator, an important indicator of consumer confidence.
Later Tuesday, the U.S. is to publish industry data on house price inflation, a leading indicator of demand in the housing market. The U.S. is also to release data on consumer confidence and manufacturing activity in Richmond.
Wednesday, December 28
Japan is to publish a flurry of data, with government reports on household spending, inflation, unemployment, manufacturing and retail sales, the leading indicator of consumer spending, which accounts for the majority of economic activity.
Meanwhile, Switzerland’s KOF Economic Institute is to produce its economic barometer, a leading indicator of economic health.
The U.S. is to release the treasury currency report.
Thursday, December 29
In the euro zone, Germany is to publish preliminary data on consumer price inflation, which accounts for a majority of overall inflation.
Meanwhile, the European Central Bank is to publish a report on M3 money supply and private lending.
Later Thursday, the U.S. is to publish its weekly government report on initial jobless claims, as well as industry data on pending home sales, a leading indicator of economic health. The U.S. is also to release official data on crude oil stockpiles and industry data on business conditions in the Chicago area, a leading indicator of economic health.
Friday, December 30
Japan is to release preliminary data on industrial production, a leading indicator of economic health. Elsewhere, Australia is to produce government data on private sector credit.
The U.K. is to round up the week with a report by the Nationwide Building Society on house price inflation, a leading indicator of the housing industry’s health.
Forexpros
