Forex Pros – The yen surged against the U.S. dollar on Friday, after an 8.9-magnitude earthquake followed by a tsunami devastated Japan’s northern coast, sparking speculation that companies will repatriate yen to help pay for rebuilding efforts.
The yen appreciated 1.37% against the dollar, after dipping lower in the immediate aftermath of the quake. However, uncertainty remains over longer-term currency moves as it is still to early to assess the extent of the damage and how much money may be needed to rebuild parts of the country that were destroyed.
Elsewhere, the euro pared losses against the dollar on Friday after the leaders of the 17-nation euro zone said they had reached an agreement on a German-inspired competitiveness pact that calls for far reaching reforms across the single currency bloc. European Union leaders have said they want to expand the European Financial Stability Facility by the end of the month.
Meanwhile, the pound fell to a three-week low against the dollar on Friday amid concerns that an uncertain global economic outlook may reduce the likelihood of a near-term rate hike by the Bank of England. On Thursday, the BoE kept its interest rate on hold, in a widely expected decision.
Next week, the Bank of Japan, which has said it is standing by to supply adequate liquidity to money markets, is to meet on Monday. The next most closely watched event looks set to be the Federal Reserve’s policy setting meeting on Tuesday.
Also next week, geopolitical tensions in the Middle East and North Africa look likely to continue to weigh on market sentiment.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, March 14
The BoJ is planning to offer several trillion yen to the money markets as part of an emergency market operation, aimed at ensuring market stability in the aftermath of Friday’s massive earthquake.
Also Monday, the euro zone is to publish official data on industrial production, a leading indicator of economic health.
Meanwhile, Canada is to publish a government report on the capacity utilization rate, an important indicator of consumer inflation.
Tuesday, March 15
The Reserve Bank of Australia is to publish the minutes of its most recent policy setting meeting. The minutes give markets an in-depth insight into the economic conditions that influenced the decision on where to set interest rates. The country is also to publish official data on new motor vehicle sales, a sign of consumer confidence as well as an index of economic indicators, designed to predict the future direction of the economy.
In the euro zone, the ZEW Centre for Economic Research is to publish a report on German economic sentiment, a leading indicator of economic health.
The U.S. is to publish official data on manufacturing activity in New York state, as well as government reports on import prices and the balance of domestic and foreign investment. In addition, the Federal Reserve is to hold its policy setting meeting before announcing its federal funds rate. The banks rate statement will be closely watched as it discusses the economic outlook and offers clues on the outcome of future votes.
Also Tuesday, Canada is to publish official data on labor productivity and new motor vehicle sales, while Japan is scheduled to publish a manufacturing sentiment index.
Wednesday, March 16
Australia is to publish official data on housing starts, a important indicator of economic health. Meanwhile, the BoJ is expected to publish its monthly report, which looks at the data policymakers evaluated when making the most recent interest rate decision. Later in the day, Japan is to publish its tertiary industry activity index, a leading indicator of economic health.
Also Wednesday, the Governor of the BoE, Mervyn King is to speak at an event in Beijing; his comments will be closely watched for any clues to the future possible direction of monetary policy. The U.K. is to publish official data on claimant count change, the first indication of the employment situation. The country is also to publish government data on average earnings and the country’s unemployment rate.
In Switzerland, the ZEW Centre for Economic Research is to publish a report on economic expectations, a leading indicator of economic health. Elsewhere, the euro zone is to publish official data on consumer price inflation, which accounts for a majority of overall inflation.
The U.S. is to publish a flurry of government data, with reports on building permits, an excellent gauge of future construction activity, as well as data on producer price inflation, housing starts and crude oil stockpiles. Meanwhile, Canada is to release official data on manufacturing sales, a leading indicator of economic health.
Thursday, March 17
The RBA is to publish its quarterly bulletin, which provides a detailed analysis of current and future economic conditions from the bank’s point of view.
Switzerland’s State Secretariat for Economic Affairs is to publish its quarterly economic forecast, which looks at major GDP components such as consumption and investment, as well as employment and inflation. Later in the day, the Swiss National Bank is to announce its three-month Libor rate and publish its rate statement, which offers clues on the outcome of future rate decisions. Also Thursday, the country is to publish official data on industrial production.
Elsewhere, the BoE is to publish a report on consumer inflation expectations, while in the euro zone markets in Italy are to remain closed for a national holiday.
The U.S. is to publish official data on initial jobless claims, the nation’s earliest employment data. The country is also to publish government data on consumer price inflation, industrial production and the capacity utilization rate. Meanwhile, the Federal Reserve Bank of Philadelphia is to publish an index of manufacturing activity, a leading indicator of economic health.
In addition, Canada is to publish official data on foreign securities purchases and wholesale sales, a leading indicator of consumer spending.
Meanwhile, the BoJ is expected to publish the minutes of its most recent monetary policy meeting.
Friday, March 18
The U.K. is to publish industry data on consumer confidence, a leading indicator of consumer spending. Later in the day, the BoE is to produce preliminary data on mortgage approvals, a leading indicator of housing market demand.
In the euro zone, Germany is to publish a report on producer price inflation, while Italy is to release official data on its trade balance. The single currency bloc is also to publish official data on its trade balance and current account, which is directly linked to currency demand.
Elsewhere, Switzerland is to release official data on producer price inflation, a leading indicator of consumer inflation, while Canada is to produce government data on consumer price inflation, which accounts for a majority of overall inflation.
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