Forex Pros – The yen weakened against the U.S. dollar on Friday after the Group of Seven nations intervened in foreign-exchange markets to curb the currency’s recent gains, in support of disaster-hit Japan.
The group intervened in markets for the first time since September 2000, and for the first time ever selling yen.
Japan’s Finance Minister, Yoshihiko Noda, said the coordinated central bank interventions were an attempt to limit the damage a strong Japanese currency would have on the nation’s economy.
On Wednesday, the yen soared to a record high against the dollar, as speculation that Japanese companies were repatriating yen to help pay for rebuilding costs after the March 11 earthquake and tsunami boosted the currency, while the Japan’s unfolding nuclear crisis spurred demand for the traditional safe haven yen.
Meanwhile, geopolitical tensions in the Middle East and North Africa and rising oil prices also fuelled safe haven demand, helping the Swiss franc to an all-time high against the dollar on Wednesday.
Bahrain declared a three-month state of emergency on Tuesday as forces from neighboring Saudi Arabia arrived in the nation to support its government.
Elsewhere, the euro climbed to its highest level against the dollar this year, on expectations for a near-term interest rate hike by the European Central Bank. On Friday, ECB President Jean-Claude Trichet said the bank was “extremely attentive” on anchoring inflation expectations.
In the week ahead, the yen’s movements will continue to be the main focus for markets. The G-7 have indicated that their efforts would be coordinated and sustained while the Bank of Japan also looks likely to continue sell more yen in the coming days.
Also next week, the President of the ECB, Jean-Claude Trichet and the Chairman of the U.S. Federal Reserve, Ben Bernanke, are to speak while markets in Japan are to remain closed on Monday for a public holiday.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, March 21
Markets in Japan are to remain closed for a national holiday. In the U.K., property website Rightmove is to publish a report on house prices, an important indicator of the health of the housing industry. Also Monday, the Bank of England is to publish its quarterly bulletin.
In the euro zone, ECB President Jean-Claude Trichet is to testify on monetary policy before the European Parliament, in Brussels; his comments will be closely watched for any clues to the possible future direction of monetary policy.
Later in the day, the U.S. is to publish industry data on existing home sales, a leading indicator of economic health.
Tuesday, March 22
Switzerland is to publish a government report on its trade balance, the difference in value between imported and exported goods over the month.
The U.K. is to publish official data on consumer price inflation, which accounts for the majority of overall inflation. The country is also to publish government data on public sector borrowing as well as an industry report on industrial order expectations.
In the U.S., the President of the Federal Reserve Bank of Dallas, Richard Fisher, is to deliver a speech in Frankfurt; his comments will be closely watched for clues to future monetary policy.
Elsewhere Tuesday, Canada is to publish official data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity. The country is also to publish an index of leading economic indicators, while New Zealand is to publish official data on the country’s current account.
Wednesday, March 23
The BoE is to publish the minutes of its most recent monetary policy meeting. The minutes give an in-depth insight into the economic conditions that influenced the vote on where to set interest rates. The U.K. is also to publish industry data on mortgage approvals, an important indicator of housing market demand. Later in the day, the British Government is to release the detail of its annual budget.
Meanwhile, the euro zone is to publish official data on industrial new orders, a leading indicator of production.
The U.S. is to publish official data on new home sales, a leading indicator of economic health. In addition, the Chairman of the Federal Reserve, Ben Bernanke is to deliver a speech at a public engagement; his comments will be closely watched for any clues to the possible future direction of monetary policy.
Also Wednesday, New Zealand is to publish official data on fourth-quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy’s health, while Japan is to publish official data on its trade balance.
Thursday, March 24
The euro zone is to publish preliminary data on activity in the manufacturing and services sectors across the single currency bloc, while Germany and France are to publish individual reports.
Meanwhile, the U.S. is to release a flurry of data, with reports on durable goods orders, a leading indicator of production as well as data on initial jobless claims, the nation’s earliest employment data.
The U.K. is to produce official data on retail sales, a primary gauge of consumer spending.
Elsewhere, the Reserve Bank of Australia is to publish its financial stability review, an assessment of conditions in the financial system and potential risks to financial stability.
Later in the day, Japan is to publish government data on consumer price inflation for both Japan and the Tokyo area, while the Governor of the Reserve Bank of New Zealand is to speak at the Basel III Conference in Sydney.
Friday, March 25
In the euro zone, research group, Gfk, is to publish a report on German consumer climate, a leading indicator of consumer spending. In addition, the Ifo Institute for Economic Research is to publish a report on German business climate, a leading indicator of economic health. Meanwhile, the ECB is to publish a report on M3 money supply and private lending.
The U.S. is to round up the week with final data on its 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.
ForexPros.com
