Forexpros – The euro advanced against the U.S. dollar on Friday, after euro zone finance ministers agreed to strengthen the region’s debt firewall, while concerns over high Spanish borrowing costs eased somewhat after the government’s budget statement.
Euro zone finance ministers agreed to boost the bloc’s bailout lending limit to EUR800 billion, in order to combat the threat of sovereign debt contagion to larger economies such as Italy and Spain.
The firewall is to be comprised of EUR500 billion from the European Stability Mechanism, which will come in to effect from July, another EUR200 billion already committed in loans to Greece, Ireland and Portugal and EUR100 billion in bilateral loans and European Union funds.
Meanwhile, Spain’s government announced EUR27 billion of cuts in the most austere budget in 30 years, amid concerns that the country may be the next to need a bailout.
In the U.S., data on Friday showed that consumer spending posted its biggest jump in seven months in February, while an index of consumer sentiment rose more-than-expected in March.
The Commerce Department reported that personal spending rose 0.8% in February, above expectations for a 0.6% gain, although incomes rose only 0.2%, a little less than expected.
The Thomson Reuters/University of Michigan’s consumer sentiment index for March rose to 76.2, the highest in over a year and above expectations for a reading of 75.1.
The dollar was higher against the yen, as improved risk appetite saw investors sell the safe haven currency, which had found support earlier in the week up as Japanese companies moved to repatriate overseas earnings before the end of Japan’s fiscal year.
Elsewhere, the pound climbed to a four-and-a-half month high against the dollar on Friday, shrugging off concerns over the outlook for growth, after data earlier in the week showed that the U.K. economy contracted by 0.3% in the fourth quarter, more than the preliminary estimate for a 0.2% contraction.
In the week ahead, investors will be focusing on Monday’s U.S. manufacturing data, as well as Friday’s report on non-farm payrolls.
In the euro zone, market participants will be looking ahead to Wednesday’s European Central Bank policy meeting, as well as data on retail sales and unemployment, amid concerns that the bloc is slipping into a recession.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, April 2
The Bank of Japan is to produce report on the Tankan manufacturing and non-manufacturing indexes, leading indicators of economic health. Meanwhile, Australia is to release official data on building approvals, an excellent gauge of future construction activity.
The U.K. is to release data on manufacturing activity, a leading indicator of economic health, as well as industry data on house price inflation. Elsewhere in Europe, Switzerland is to release an official report on retail sales, the primary gauge of consumer spending, followed by a report on business activity.
The euro zone is to produce an official report on the region’s unemployment rate, a leading indicator of economic strength.
Later in the day, the U.S. is to release a report by the Institute of Supply Management on manufacturing activity.
Tuesday, April 3
The Reserve Bank of Australia is to announce its benchmark interest rate. The bank’s rate statement will be closely watched as it contains important insights into economic conditions from the bank’s perspective. Australia is also to produce official data on retail sales, while Japan is to produce government data on average cash earnings.
The U.K. is to release data on construction sector activity, a leading indicator of economic health.
The U.S. is to produce official data on factory orders, a key indicator of production. Later Tuesday, the Federal Reserve is to release the minutes of its most recent policy meeting.
Wednesday, April 4
Australia is to produce industry data on service sector activity as well as official data on the trade balance, the difference in value between imported and exported goods and services.
The U.K. is to publish a report on service sector activity, an important indicator of economic health.
In the euro zone, official data is to be published on retail sales as well as on German factory orders, a leading gauge of production. The ECB is to announce its benchmark interest rate. The bank’s rate statement will be followed by a press conference to discuss monetary policy.
The U.S. is to produce industry data on non-farm employment change, as well as an ISM report on service sector activity and government data on crude oil stockpiles. Later in the day, U.S. Treasury Secretary Timothy Geithner is due to speak.
Thursday, April 5
The Swiss National Bank is to release data on foreign currency reserves, which provides insight into the bank’s currency market operations. Switzerland is also to release official data on consumer price inflation, which accounts for a majority of overall inflation.
The U.K. is to publish official data on manufacturing production, a leading indicator of economic health. Later in the day, the Bank of England is to produce data on its asset purchase facility and benchmark interest rate, followed by a statement.
Meanwhile, in the euro zone Germany is to publish official data on industrial production, a leading indicator of economic health.
Canada is to release official data on building permits, as well as government data on employment change and the country’s unemployment rate. The country is also to release the results of a private survey on business activity.
Later Thursday, the U.S. is to publish government data on unemployment claims, a leading indicator of economic health.
Friday, April 6
Markets in Australia, Switzerland, the euro zone, U.K. and Canada are to remain closed for national holidays.
The U.S. is to round up the week with government data on non-farm employment change, followed by data on the unemployment rate. The country is also to release a government report on average hourly earnings, a leading indicator of consumer inflation.
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