Forexpros – The U.S. dollar fell against the yen on Friday and weakened slightly against the euro after disappointing U.S. employment data fuelled speculation over the possibility of fresh monetary easing by the Federal Reserve.
The Department of Labor said that the U.S. economy added just 69,000 jobs in May, far below expectations for a gain of 150,000, while the unemployment rate ticked up to 8.2% from 8.1%.
A separate report showed that manufacturing activity in the U.S. slowed in May. The Institute for Supply Management’s manufacturing index fell to 53.5 from 54.8 in April, against expectations for a decline to 53.9.
The weak data added to concerns that the economic recovery in the U.S. is losing momentum, which could lead to a third round of quantitative easing from the U.S. central bank.
The greenback slid to an intra-day low against the yen following the jobs data, after earlier falling to the lowest level since February 14, prompting the Bank of Japan to conduct a rate check, indicating that it is still prepared to intervene.
The euro pulled back from a 22-month low against the greenback, but was unable to hold gains amid fears that Spain’s near unsustainable borrowing costs would force Madrid to seek outside financial aid to bailout its ailing banking sector.
The pound came off a four-and-half month low against the greenback on Friday, but remained under pressure after a report showing that U.K. manufacturing activity shrank at its fastest pace in three years in May added to expectations that the Bank of England will implement fresh easing measures to shore up growth in the recession hit economy.
Meanwhile, the Canadian dollar touched a six-month low against the greenback in risk-off trade on Friday.
Earlier in the day, official data showed that Canada’s gross domestic product grew at an annualized rate of 1.9% in the first quarter, below the Bank of Canada’s forecast for growth of 2.5%.
In the week ahead, investors will be eyeing a flurry of interest rate decisions by the European Central Bank, the BoE, the Reserve Bank of Australia and the BoC.
Market participants will also be watching Thursday’s testimony on the economic outlook by Fed Chairman Ben Bernanke for any indications that the central bank is considering more monetary easing.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, June 4
Australia is to release industry data on job advertisements, as well as official data on company operating profits, a leading indicator of economic health. Markets in New Zealand are to remain closed for a public holiday.
The euro zone is to publish a report on investor confidence, an important indicator of economic health. Markets in the U.K. are to remain closed for a national holiday.
Later in the day, the U.S. is to produce official data on factory orders, a leading indicator of production.
Tuesday, June 5
The RBA is to announce its benchmark interest rate. The announcement is to be followed by the bank’s rate statement, which discusses the economic outlook. In addition, Australia is to publish official data on the current account as well as a report on service sector activity.
Markets in the U.K. are to remain closed for to a national holiday.
The euro zone is to produce official data on retail sales, the primary gauge of consumer spending, which accounts for the majority of consumer spending, while Germany is to publish official data on factory orders. In addition, Spain is to hold an auction of government bonds.
The BoC is to announce its benchmark interest rate; the announcement is to be accompanied by the central bank’s rate statement. Canada is also to publish official data on building permits, a leading gauge of future construction activity.
In the U.S., the Institute for Supply Management is to release a report on non-manufacturing activity, a key indicator of economic health.
Wednesday, June 6
Australia is to produce official data on first quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy’s health.
The U.K. is to release industry data on house price inflation, a leading indicator of demand in the housing sector, as well as a report on construction sector activity.
In the euro zone, the ECB is to announce its benchmark interest rate. The announcement is to be followed by a press conference with ECB head Mario Draghi to discuss the monetary policy decision and the economic outlook for the region. Meanwhile, Germany is to produce official data on industrial production, a leading indicator of economic health.
Later Wednesday, the U.S. is to release revised data on nonfarm productivity, followed by government data on crude oil stockpiles, while the Federal Reserve is to release its Beige Book.
Thursday, June 7
Australia is to produce official data on employment change and the country’s unemployment rate, a leading indicator of economic health.
Switzerland is to publish official data on consumer price inflation, which accounts for the majority of overall inflation. Meanwhile, the Swiss National Bank is to publish a report on foreign currency reserves.
In the euro zone, France is to hold an auction of 10-year government bonds.
The BoE is to announce its benchmark interest rate. In addition, the U.K. is to release data on service sector activity and industry data on retail sales.
Canada is to publish a report by the Richard Ivey School of Business on its purchasing managers’ index.
Also Thursday, the U.S. is to release government data on initial unemployment claims, while Fed Chairman Ben Bernanke is to appear before the Joint Economic Committee, in Washington.
Friday, June 8
Japan is to release government data on the country’s current account, as well as revised data on first quarter economic growth.
Australia is to produce official data on the trade balance, which is the difference in value between imported and exported goods and services, followed by a report on home loans, a leading indicator of demand in the housing market.
The U.K. is to release official data on producer price inflation input, a leading indicator of consumer inflation, as well as official data on consumer inflation expectations.
Canada is to publish industry data on housing starts, in addition to official data on employment change and the unemployment rate. The country is also to release official data on the trade balance.
The U.S. is to round up the week with government data on its trade balance.
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