The main event in the currency markets this week was the statement issued by the ECB, alerting markets participants that inflation was moving up at an unacceptable rate, and the ECB was not going to sit on the sidelines waiting for growth to gain traction before it began to fight inflation.
European Central Bank President Jean-Claude Trichet signaled that the central bank could raise interest rates next month for the first time since the financial crisis in 2008. Mr. Trichet warned that risks of inflation in the euro zone and his hawkish comments drove down Euribor and Bund prices. At the same time the Euro currency pushed higher to the upside, as higher Euro yields made the currency more attractive to investors.
The Euro broker through resistance near 1.3860 and traded higher will strong upward momentum.
Oil prices also drove the markets. WTI forged above $100 dollars a barrel and closed near $103 dollars a barrel. Brent prices continued to lead, but the premium over WTI has narrowed. Traders continue to speculate on whether the contagion will spread to other larger producers of oil.
Monday – March 7 2011 – Japan Leading Index (500 GMT)
The Japan Leading Index is a composite of 12 major leading indices for Japan . Movements in these indicators are known to precede larger developments in the rest of the economy. The Index includes account inventory ratios, machinery orders, stock prices and other leading economic indicators.
Tuesday- March 8, 2011 – Canada Housing Starts (1330 GMT)
Housing Starts reflects the rate of growth in housing construction. Housing Starts act as an indicator measuring the strength of Canada’s construction sector and housing market. Economists also use the figure as a leading indicator for the economy as a whole due to Housing Starts’ sensitivity to changes in the business cycle. With USD/CAD sitting on support near .97 a strong number could see a break of support.
Wednesday – March 9, 2011 – New Zealand Interest Rate Decision (20:00 GMT)
The RBNZ is known for its clarity regarding monetary policy intentions, thus the result is usually foreseen in advance. The decision aligns with the Reserve Bank of New Zealand ‘s monetary policy to spur or slow economic growth or affect the exchange rate. Given the recent Earth Quake that rocked the second largest city in the country, there is the likelihood that the RBNZ will decrease rates to help stimulate the economy.
Thursday – March 10, 2011- Australian Employment Change and Rate (0030 GMT)
Tracks the number of employed in Australia . The figure appears in the monthly Labor Force Survey conducted by the Australian Bureau of Statistics. The question of how the recent floods have effected employment will be a topic that is discussed with regard to this number.
Thursday – March 10, 2011 Bank of England Interest Rate Decision (1200 GMT)
The BoE meets monthly to decide on monetary policy. After each meeting policy decisions are announced. The main task of the Bank of England’s Monetary Policy Committee is to set the monetary stance by fixing the overnight borrowing rate. The Bank of England Monetary Policy Committee issues a statement with every rate announcement. Expectations are that there is a slight chance that the BOE will increase rates, despite mixed economic data over the past month.
Friday March 11, 2011 Chinese Data (CPI, PPI, Industrial Production, Retail Sales 200 GMT)
The Chinese data deluge will focus on the inflation information. The CPI and PPI are expected to come in close to 5% and 6% respectively. Of these two data points, the consumer price index will hold the most weight and put pressure on riskier assets if the number is higher than expected.
Friday March 11, 2011 UK Producer Price Index (930 GMT)
A monthly survey that measures change in input prices as incurred by UK manufacturers. The BOE is concern with PPI and if it is flowing into consumer prices.
