Forex Pros – Last week saw the U.S. dollar fall against the euro for the first week in almost a month, following tepid U.S. economic data and amid revived expectations that the European Central Bank will raise interest rates.
The euro strengthened broadly on Friday after ECB Executive Board member, Lorenzo Bini Smaghi, said the bank may need to raise interest rates as global inflation pressures mount.
Earlier in the week, the dollar turned lower against most of its major counterparts, following data showing that retail sales rose less-than-expected and as a rise in jobless claims damped demand.
Data on Tuesday showed that U.S. retail sales rose 0.3% in January, the least since a drop in June, and less than the expected 0.5% increase. Meanwhile, the Labor Department said the number of people who filed for unemployment assistance in the U.S. in the previous week rose more-than-expected.
Also last week, the Swiss franc and the yen climbed against the dollar as ongoing political unrest in the Middle East fuelled risk aversion while the pound rose against the dollar and euro on speculation the Bank of England will raise interest rates in the coming months.
Looking ahead, concerns over Portugal’s debt problems look likely to continue after the yield on Portuguese government bonds hit a fresh euro lifetime high on Friday. Yields on five- and 10-year Portuguese debt are now trading above 7%, considered a key threshold for whether a country can continue to fund itself.
Next week, the biggest focus will be the release on Friday of preliminary data on fourth quarter U.S. gross domestic product. Before that, markets in the U.S. are to remain closed on Monday for a national holiday.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, February 21
The U.K. is to publish industry data on house prices, a leading indicator of the housing industry’s health.
The euro zone is to publish preliminary data on activity in the manufacturing and services sectors, while Germany and France are to publish individual reports. In addition, the Ifo Institute for Economic Research is to publish a report on German business climate, a leading indicator of economic health.
Also Monday, markets in the U.S. are to remain closed for the President’s Day holiday.
Tuesday, February 22
Switzerland is to publish government data on its trade balance; the difference in value between imported and exported goods over the month, while later in the day the country is to publish the results of a consumption index.
In the euro zone, market research group Gfk is to publish a report on German consumer climate, a leading indicator of consumer spending.
The U.K. is to publish official data on public sector net borrowing, while Canada is to publish government data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity.
The U.S. is to publish data on consumer confidence compiled by the Conference Board as well as industry data on house prices and a report on manufacturing activity in Richmond.
Elsewhere, New Zealand is to publish official data on inflation expectations, while the Governor of the Reserve Bank of Australia, Glenn Stevens is to speak at a public engagement and Japan is to publish official data on its trade balance.
Wednesday, February 23
Australia is to publish a government report on the value of completed construction projects, which gives an important insight into overall GDP, as well as a report on wage increases, a leading indicator of consumer inflation. Later in the day, the country is to publish an index of leading economic indicators, designed to predict the future direction of the economy.
Switzerland is to publish official data on producer price inflation, a leading indicator of consumer inflation. Also in Europe, the euro zone is to publish official data on industrial new orders, a leading indicator of economic health.
In the U.K., the BOE is to publish the minutes of its most recent policy setting meeting, providing in-depth insights into the economic conditions that influenced the vote on where to set interest rates. Meanwhile, the British Bankers Association is to publish data on mortgage approvals, a leading indicator of housing market demand.
Also Wednesday, the U.S. is to publish industry data on existing home sales, a leading indicator of economic health.
Thursday, February 24
In the euro zone, Germany is to publish final data on fourth quarter GDP, the broadest measure of economic activity and the primary gauge of the economy’s health.
Switzerland is to publish government data on the employment level, which measures the number of employed people during the previous quarter, while the U.K. is to publish industry data on retail sales, a leading indicator of consumer spending.
Meanwhile, the U.S. is to publish a flurry of data, with reports on durable goods orders, a leading indicator of production as well as data on initial jobless claims, an important signal of overall economic health. The country is also to publish a report on new home sales.
Elsewhere, Japan is to publish government data on consumer price inflation, which accounts for a majority of overall inflation, while Australia is to publish a report on private capital expenditure, a leading indicator of economic health.
Friday, February 25
In the euro zone, Germany is to publish preliminary data on consumer price inflation, which accounts for a majority of overall inflation, while France is to publish data on consumer spending. Meanwhile, the ECB is to publish a report on M3 money supply and private lending.
Switzerland is to publish the results of an economic index, compiled by the KOF Economic Research Agency, designed to predict the direction of the economy over the following six months.
The U.K. is to publish revised data on fourth quarter GDP, the broadest measure of economic activity, as well as a report on preliminary business investments, a leading indicator of economic health. Also Friday, market research group Gfk is to publish data on consumer confidence in the U.K.
The U.S. is to round up the week with preliminary data on fourth quarter GDP, the broadest measure of economic activity and the primary gauge of the economy’s health. Meanwhile, the University of Michigan is to publish revised data on consumer sentiment and inflation expectations.
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