This past week was a strong week for the dollar as the Euro was overwhelmed by weakness on the periphery and the Pound lost some luster after the BOE kept interest rates unchanged. The dollar index gained more than a big figure as the Yen also was less than stellar after a worse than expected GDP revision on Thursday. The earthquake that hit Japan on Friday, will have immediate ramifications for the Yen, as the BOJ will meet on Monday, to explain how they will help the Japanese nation. Oil prices moved lower during the week, generated a range of nearly $107 to $100.
Monday March 14, 2011 – Japan Interest Rate Decision and Industrial Production (0030 GMT)
The Bank of Japan will release its interest rate decision. Expectation are for unchanged rates and a statement that discussed the need for continued stimulus to enhance growth and fight deflation. They will also likely create additional stimulus to help the Japanese people after Friday’s 8.9 magnitude earthquake.Â
Additionally, Industrial production will be released at the same time. IP is the volume of items produced in Japan ‘s mining and manufacturing industries. Industrial production is considered a reliable leading indicator that conveys information about the overall health of the Japanese economy.
Tuesday March 15, 2011 – German Zew Survey (600 GMT)
A German Firm, the Center for European Economic Research (ZEW), queries financial experts throughout Europe every month in order to make a medium-term forecast about Germany ‘s economic situation. The German economy is growing at a robust pace so the only surprise would be to the downside, taking the Euro lower.
Tuesday March 15, 2011 – FOMC Interest Rate Decision (1815 GMT)
The FOMC holds eight regularly scheduled meetings per year. At these meetings, the Committee reviews economic and financial conditions, determines the appropriate stance of monetary policy, and assesses the risks to its long-run goals of price stability and sustainable economic growth. Rates are expected to remain on hold and the Fed will also continue to keep its bond purchase program intact.
Wednesday March 16, 2011 – UK Jobless Claims (930 GMT)
Jobless Claims measures the number of people who claim unemployment benefits, but are actively seeking work. Released with the Claimant Count report, Jobless Claims Change serves as a barometer for the health of the UK labor market. The BOE will watch this release closely and the Pound will rally on a better than expected jobless claims number.
Wednesday March 16, 2011 – US Producer Prices (1330 GMT)
PPI measures changes in the selling prices producers charge for goods and services, and well as tracks how prices feed through the production process. Market participants will be watching to see if higher energy and food prices have spilled over into the core. If not, this number will be glanced over. If it has, interest rates will rise, generating interest in the US dollar.
Thursday March 17, 2011 – EMU Construction Output (600 GMT)
Construction Output is a measure of construction output and activity in the Euro Zone. Increased construction suggests a growing economy as expensive construction outlays reflect consumer and business optimism.
Thursday March 17, 2011 – US CPI (1330 GMT)
CPI assesses changes in the cost of living by measuring changes consumer pay for a set of items. CPI serves as the headline figure for inflation. Inflation reflects a decline in the purchasing power of the dollar, where each dollar buys fewer goods and services. A higher than expected number will create interest in the US dollar.
Friday March 18, 2011 – German Consumer Prices (300 GMT)
German CPI measures the change in the prices paid by domestic producers. Producer prices, also known as factory gate prices, are those charged by producers usually before retail, consumer markets. The ECB is extremely concerned with inflation and a higher than expected number is likely going to draw further attention to the Euro.
Technically, the dollar gained ground against the Euro and the Pound, but it was the pound that experience the worst week. A weak PPI on Friday, took more of the steam out of the Pound, as investors are now questioning the ability of the BOE to tighten rates in the near future. Continued disappointing economic data points out of the UK could continue to put pressure on the Sterling. The currency was able to bounce off of the 50-day moving average close to 1.60.
