Forex Pros – Last week saw the yen and the Swiss franc emerge as the top performers against the U.S. dollar, as political unrest in Libya pushed oil prices to a 29-month high and fuelled demand for safe haven investments.
The franc jumped to a record high against the dollar while the yen posted its largest weekly gain of the year so far. Meanwhile, the euro also advanced against the dollar amid expectations that rising inflation will spur the European Central Bank into hiking interest rates ahead of the U.S. Federal Reserve.
The pound closed lower against the greenback after data on Friday showed a deeper economic contraction in the U.K. than earlier thought, dampening expectations for an early interest rate increase by the Bank of England.
Revised official data showed the U.K. economy shrank 0.6% in the last three months of 2010, more than the preliminary reading of a 0.5% contraction.
But the greenback came under pressure on Friday after revised fourth-quarter U.S. gross domestic product came in weaker-than-expected. GDP rose at an inflation-adjusted annual rate of 2.8%, less than the expected 3.3% gain.
Meanwhile, New Zealand’s dollar was the worst performer against the U.S. dollar last week, following the devastating 6.3 magnitude earthquake that struck the city of Christchurch.
In the week ahead, any further escalation of geopolitical tensions in North Africa and the Middle East could continue to weigh on market sentiment but a string of data out of the U.S. and Europe could steal the spotlight.
The ECB is to hold its policy setting meeting on Thursday, with investors watching for any signs of impending rate hikes while the U.S. is to release data on inflation, as well as reports on nonfarm payrolls and the unemployment rate.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, February 28
New Zealand is to kick off the week with official data on its trade balance, the difference in value between imported and exported goods over the month. The country is also to publish a report on business confidence, a leading indicator of economic health.
Japan is to publish government data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity as well as preliminary data on industrial production. Elsewhere, Australian is to release official data on private sector credit.
The euro zone is to release official data on consumer price inflation, which accounts for a majority of overall inflation.
The U.S. is to release a flurry of data, with industry data on pending home sales as well as a report on manufacturing activity in the in the Chicago area. The U.S. is also to publish official data on personal consumption expenditure and consumer price inflation.
Also Monday, Canada is to publish official data on GDP, the broadest measure of economic activity and the primary gauge of the economy’s health, as well as a report on the country’s current account.
Tuesday, March 1
Australia is to publish official data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity, as well as a report on the country’s current account. The country is also to publish government data on commodity prices as commodities account for over half of the country’s export earnings.
Later in the day, the Reserve Bank of Australia is to announce its benchmark interest rate. The announcement will be accompanied by the banks rate statement, which contains commentary about the economic conditions that influenced the rate decision. It also discusses the economic outlook and offers clues on the outcome of future decisions.
Switzerland is to publish official data on GDP, as well as data on manufacturing sector activity, a leading indicator of economic health.
Japan is to publish government data on capital spending, a leading indicator of economic health.
The U.K. is to publish industry data on house prices, an important indicator of the housing industry’s health. The country is also to publish official data on manufacturing activity, as well as a report by the BOE on net lending to individuals, final mortgage approvals and M4 money supply.
Also Tuesday, the BOE Governor and monetary policy committee members are to testify on inflation and the economic outlook before Parliament’s Treasury Committee.
In the euro zone, Germany is to publish official data on employment change, while the wider economic zone is to publish preliminary data on consumer price inflation as well as a report on the unemployment rate.
Elsewhere on Tuesday, the Bank of Canada is to announce its benchmark interest rate. The announcement will be accompanied by the banks rate statement which discusses monetary policy.
In the U.S., the Chairman of the Federal Reserve, Ben Bernanke, is to testify on the semi-annual monetary policy report before the Senate Banking Committee, in Washington. His comments will be closely scrutinized for clues to the future possible direction of monetary policy. Meanwhile, the Institute for Supply Management is to publish a report on manufacturing activity.
Wednesday, March 2
Australian is to publish official data on GDP, while later in the day the country is to publish industry data on services sector growth, a leading indicator of economic health.
The U.K. is to publish government data on activity in the construction sector, a leading indicator of economic health.
In the U.S., Ben Bernanke is to testify for a second day before the Senate Banking Committee. Meanwhile, the Fed is to publish its Beige Book, which contains data policymakers examined before making their interest rate decision.
The country is also to publish data on private sector payrolls compiled by payroll processing firm ADP, which heads up government data by two days, as well as a report on crude oil stockpiles.
In addition, Canada is to publish its raw materials price index, a leading indicator of consumer price inflation.
Thursday, March 3
The U.S. is to release its key weekly report on initial jobless claims, a leading indicator of overall economic health. The country is also to publish revised data on nonfarm productivity, as well as a report on service sector activity, while Fed chair Ben Bernanke is to speak at a public engagement.
In the euro zone, the ECB is to announce its minimum bid rate. The announcement will be followed by a closely watched press conference to discuss the rate decision. Also Thursday, the euro zone is to publish official data on GDP, while both Germany and the euro zone are to release data on retail sales.
Meanwhile, the U.K. is to publish its services PMI, a leading indicator of economic health, while Switzerland is to produce official data on retail sales.
Elsewhere, Australia is to publish official data on building approvals, a leading gauge of future construction activity. The country is also to publish data on its trade balance, the difference in value between imports and exports over the month.
Friday, March 4
The U.S. is to round up the week with a closely watched report on non-farm payrolls, a leading indicator of job creation. The country is also to publish government data on the rate of unemployment, average hourly earnings as well as factory orders.
In Canada, the Richard Ivey School of Business is to publish its PMI, a leading indicator of economic health.
Later in the day, ECB President, Jean-Claude Trichet is to speak at a public engagement; his comments will be closely watched for any clues to the future possible direction of monetary policy.
ForexPros.com
