Forex Pros – Last week saw the euro tumble to a six-week low against the broadly stronger U.S. dollar, as concerns over the region’s sovereign debts and fears over global economic growth saw investors shun risk.
Over the week, a steep slide in commodities, oil and other high-yielding assets saw the dollar strengthen as traders sought safe harbor from volatile markets.
Speculation that Greece will be forced to restructure its debt pushed the nation’s borrowing costs to almost record highs.
European Union leaders are due to meet on Monday to discuss further support for Greece, beyond the EUR110 billion bailout granted a year ago. However, leaders are awaiting the conclusions of a European and International Monetary Fund mission to Athens before making any decisions on further steps.
On Friday, comments by European Central Bank President Jean-Claude Trichet triggered some confusion. In a Spanish television interview, Trichet stated he saw a “hump” in the consumer price index, not a “peak” as Reuters originally reported.
Meanwhile, weakness in commodities triggered a decline in commodity-lined currencies. The Australian dollar fell 0.90% against the greenback, while the New Zealand currency sank 1.1%.
Elsewhere, the pound was down for a second week against the dollar, slipping to a six-week low, as signs the U.K. economic recovery is faltering dampened expectations for a rate hike by the Bank of England in the coming months.
The Swiss franc was down 1.5% against the dollar after softer-than-expected inflation data dampened expectations that the Swiss National Bank would raise interest rates in the near future.
Looking ahead, investors will be closely watching developments in the euro zone, with the single currency likely to remain under pressure until the conclusion of Monday’s meeting.
Also next week the U.S. is to publish government data on housing and employment while the Federal Reserve is to publish the minutes of its most recent policy meeting.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, May 16
The U.K. is to publish industry data on house price inflation, a leading indicator of the housing industry’s health. Elsewhere, Japan is to publish government data on core machinery orders, a leading indicator of production, while Australia is to publish official data on home loans and new vehicle sales.
The euro zone is to publish official data on consumer price inflation, which accounts for a majority of overall inflation.
Later in the day, Federal Reserve Chairman Ben Bernanke is to speak; his comments will be closely watched for any clues to the possible future direction of monetary policy. The U.S. is also to publish government data on the balance of domestic and foreign investment as well as data on manufacturing activity in New York state.
In addition, Canada is to publish official data on manufacturing sales, a leading indicator of economic health while Bank of Canada Governor Mark Carney is to speak.
Tuesday, May 17
The Reserve Bank of Australia is to publish the minutes of its most recent policy meeting. The minutes give in-depth insights into the economic conditions that influenced the decision on where to set interest rates.
The U.K. is to release government data on consumer price inflation, which accounts for a majority of overall inflation.
In the euro zone, the ZEW Centre for Economic Research is to publish a report on German economic sentiment, a leading indicator of economic health.
The U.S. is to publish official data on building permits, an excellent gauge of future construction activity as well as data on housing starts, a leading indicator of economic health. The country is also to publish government reports on the capacity utilization rate and industrial production.
Later in the day, New Zealand is to publish official data on producer price inflation, a leading indicator of consumer inflation.
Wednesday, May 18
Japan is to publish official data on tertiary industry activity, a leading indicator of economic health. Meanwhile, Australia is to publish a report on consumer sentiment as well as official data on its wage price index, a leading indicator of consumer inflation.
The U.K. is to publish government data on claimant count change and the country’s unemployment rate, a leading indicator of economic health. In addition, the BoE is to publish the minutes of its most recent policy meeting. The minutes give in-depth insights into the economic conditions that influenced the decision on where to set interest rates.
Later in the day, the Federal Reserve is also to publish the minutes of its last policy meeting. The U.S. is also to publish government data on crude oil stockpiles.
Also Wednesday, Canada is to publish an index of leading economic indicators, designed to predict the future direction of the economy, as well as data on wholesale sales, a leading indicator of consumer spending.
Thursday, May 19
Japan is to publish preliminary data on first quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy’s health.
Elsewhere, Australia is to publish a report on inflation expectations, while New Zealand’s government is to publish details of the country’s annual budget.
The U.K. is to publish official data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity. Later in the day, the country is to publish industry data on industrial order expectations.
The ZEW Centre for Economic Research is to publish a report on Swiss economic expectations, a leading indicator of economic health.
The U.S. is to publish its weekly report on initial jobless claims as well as industry data on existing home sales and official data on manufacturing activity in Philadelphia.
Friday, May 20
The Bank of Japan is to hold a policy meeting. The meeting will be followed by a closely watched press conference.
The euro zone is to publish data on German producer price inflation, a leading indicator of consumer inflation as well as data on the current account of the 17-nation currency bloc.
Canada is to round up the week with official data on consumer price inflation, which accounts for a majority of overall inflation as well as a report on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity.
ForexPros.com
