Forexpros – The euro fell against the U.S. dollar on Friday, as concerns over Europe’s bailout package and ongoing political uncertainty in Greece dominated last week’s G-20 meetings and continued to weigh on market sentiment.
Risk appetite was hit on Friday after German Chancellor Angela Merkel said that few countries in the Group of 20 nations had committed to providing more resources for the euro zone’s rescue fund.
Investors were also jittery ahead of a government confidence vote in Greece, amid growing internal opposition to Prime Minister George Papandreou’s handling of the country’s sovereign debt crisis. Early Saturday morning, Papandreou’s government passed the vote by a very narrow margin.
Meanwhile, the greenback remained supported after data showed that the U.S.
unemployment rate ticked down unexpectedly in October to 9.0% from 9.1% the previous month. The data came after a report showing that non-farm employment rose less-than-expected by 80K in October.
Market sentiment strengthened on Thursday, after Papandreou cancelled his controversial referendum on the country’s bailout program. Earlier in the day, the European Central Bank lowered its interest rate to 1.25% from 1.50% as the region’s escalating debt crisis overshadowed concerns over persistently high inflation.
Speaking at the bank’s post policy meeting press conference, new president Mario Draghi said that ongoing tensions in financial markets could slow the pace of growth in the euro zone and said the region’s economy continued to be “subject to particularly high uncertainty and intensified downside risks.”
Earlier in the week, Federal Reserve Chairman Ben Bernanke said that economic growth was “frustratingly slow” and “very unsatisfactory.” He added that additional round of asset purchases, specifically mortgage-backed securities, was a “viable option.”
Elsewhere, Japanese officials launched an intervention to curb the appreciation of the yen on Monday. Japanese Finance Minister Jun Azumi said Tokyo had acted on its own and would keep intervening until it was satisfied with the results.
In risk related currencies, the Australian dollar was weighed after the Reserve Bank of Australia cut its interest rate by 0.25% to 4.5% on Tuesday, while the Canadian dollar came under pressure after official data showed that Canada’s unemployment rate rose more-than-expected to 7.3% in October.
In the week ahead, developments in Greece will remain in focus, as opposition parties are calling for early elections while George Papandreou is pushing for a cross-party government to implement the latest European aid package.
Investors will also be closely watching for a U.S. report on trade balance, as well as the country’s weekly report on unemployment claims.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, November 7
Australia is to produce a report on job advertisements.
Elsewhere, the U.K. is to release a report on house price inflation, a leading indicator of the housing industry’s health. Meanwhile, Switzerland is to publish an official report on consumer price inflation, which accounts for a majority of overall inflation.
In the euro zone, data is to be released on investor confidence. Later in the day, official data on retail sales is to be published, as well a report on German industrial production.
Tuesday, November 8
The U.K. is to produce industry data on retail sales, followed by a report on house price balance, a leading indicator of housing inflation. Later Tuesday, an official report is to be released on U.K. manufacturing activity as well as preliminary data on gross domestic product.
Australia is to publish an official report on trade balance, followed by the National Australia Bank business confidence index.
Elsewhere, Switzerland is to produce a government report on consumer climate, a key indicator of consumer spending and a leading gauge of overall economic activity. Swiss National Bank Governing Board Chairman Philipp Hildebrand is also due to speak later in the day.
In the euro zone, members of the Economic and Financial Affairs Council are to hold talks.
Meanwhile, Bank of Canada Governor Mark Carney is due to speak. Later in the day, the country is to produce a report on housing starts, a leading indicator of economic health.
Wednesday, November 9
Australia is to release a report on the Westpac consumer sentiment index. Later Wednesday, an official report is to be published on Australian home loans, a leading indicator of demand in the housing market. Meanwhile, New Zealand is to produce its financial stability report.
The U.K. is to publish an official report on trade balance.
Elsewhere, Canada is to produce official data on new housing price inflation, a key gauge of the housing industry’s health. In the U.S., Federal Reserve Chairman Ben Bernanke is due to deliver welcoming remarks at the Federal Reserve Conference on Small Business and Entrepreneurship during an Economic Recovery. An official report on U.S. crude oil inventories is also to be released later Wednesday.
Thursday, November 10
Australia is to produce data on inflation expectations, followed by an official report on employment change, a leading indicator of consumer spending. Later in the day, the country is to publish an official report on the unemployment rate, a key signal of overall economic health.
Meanwhile, Japan is to publish government data on core machinery orders, a leading indicator of production.
In the euro zone, an official report is to be released on French industrial production, a key measure of economic health. Later Thursday, the European Central Bank is to produce its monthly bulletin, which reveals the statistical data that the ECB Governing Board evaluated when making the latest interest rate decision, and provides detailed analysis of current and future economic conditions.
Elsewhere in Europe, the U.K. is to publish a report on the Bank of England asset purchase facility, as well as a statement on its interest rate.
Canada is to produce official data on trade balance. Meanwhile, the U.S. is also to release a report on trade balance as well as weekly data on unemployment claims. Later in the day, government reports are to be released on import prices and federal budget balance.
Friday, November 11
New Zealand is to publish industry data on house price inflation. Meanwhile, Japan is to release a report on tertiary industry activity, a leading indicator of economic health.
In the euro zone, French markets will be closed due to a national holiday. Elsewhere, the U.K. is to produce an official report on producer price inflation, a leading indicator of consumer inflation.
In Canada, markets will be closed due to a national holiday.
The U.S. is to round up the week with the University of Michigan’s preliminary report on consumer sentiment.
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