Forex Pros – Last week saw the U.S. dollar suffer its worst weekly performance since September, as U.S. economic growth slowed and as Federal Reserve Chairman Ben Bernanke said he was unsure when monetary stimulus will end.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, hit a three-year low on Friday after tumbling 3.8% in April.
On Thursday, the Commerce Department said U.S. economic growth slowed to a 1.8% annual rate in the first quarter, from 3.1% in the prior three months.
Earlier in the week, in his first ever post-policy meeting press conference, Bernanke said that the central bank, which left interest rates unchanged, “will complete” its USD600 billion bond-buying program by the end of June but indicated that the Fed was in no rush to tighten monetary policy with the jobs market still in a “very, very deep hole.”
The euro rallied to a 16-month high against the greenback, buoyed by stronger-than-expected euro-zone inflation data that increased the chance of another rate hike by the European Central Bank in the coming months.
Against the yen, the greenback fell to a one-month low of 81.03 on Friday. A dip below 81.00 would likely increase market jitters about further intervention from the Bank of Japan, which intervened March 18 to sell the yen in a coordinated action with other Group of Seven central banks.
The Swiss franc surged to a record high versus the greenback after Swiss National Bank President Philipp Hildebrand said expansionist monetary policy risks stoking inflation and as Switzerland’s leading economic indicator climbed unexpectedly in April.
Meanwhile, Australia’s dollar rose to its highest level since the currency was floated in December 1983, boosted by an improving economy and higher commodity prices.
Looking ahead, in a week that will be shortened by holidays in many places, markets will be looking to Friday’s U.S. non-farm payrolls report to gauge the strength of the jobs market while the ECB, the Bank of England and the Reserve Bank of Australia are all to announce their benchmark interest rates.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, May 2
Markets in the euro zone, the U.K. and Switzerland will remain closed for the May Bank Holiday.
Australia is to release government data on house price inflation, a leading indicator of the housing industry’s health as well as official data on commodity prices. Also Monday, Japan is to publish official data on average cash earnings while New Zealand is to publish government data on labor costs, a leading indicator of consumer inflation.
Switzerland is to publish government data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity. The country is also to release an index of manufacturing activity, a leading indicator of economic health.
In the euro zone, ECB President Jean-Claude Trichet is to speak in Frankfurt; his comments will be closely watched or any possible clues to the future direction of monetary policy. Later in the day, the Governor of the BoE Mervyn King is to speak.
Also Monday, the U.S. Institute for Supply Management is to publish its manufacturing PMI, a leading indicator of economic health, while Canada is to publish its raw material price index.
Tuesday, May 3
Markets in Japan will remain closed for Constitution Day. Meanwhile, the RBA is to announce its cash rate. The bank will also publish its rate statement which discusses the economic outlook and offers clues on the outcome of future decisions.
The U.K. is to publish its manufacturing PMI, a leading indicator of economic health, as well as industry data on retail sales. Meanwhile, the euro zone is to publish official data on producer price inflation.
Also Tuesday, the U.S. is to release government data on factory orders, a leading indicator of production. Later in the day, New Zealand is to publish official data on building consents, a leading gauge of future construction activity.
Wednesday, May 4
The U.K. is to publish industry data on house price inflation, a leading indicator of economic health as well as a report on growth in the construction sector. In addition, the BoE is to publish data on net lending to individuals, mortgage approvals and M4 money supply.
The euro zone is to release 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 U.S. is to publish data on non-farm payrolls compiled by payroll processing firm ADP, which leads government data by two days. Meanwhile, the U.S. Institute for Supply Management is to publish its non-manufacturing PMI. The country is also to publish government data on crude oil stockpiles.
In addition, New Zealand is to publish quarterly data on employment change and the country’s unemployment rate. Elsewhere, markets in Japan are to remain closed for a public holiday.
Thursday, May 4
In the euro zone, Germany is to publish official data on factory, a leading indicator of production. In addition, the ECB is to announce its minimum bid rate. The announcement will be followed by a closely watched press conference.
Meanwhile, the U.K. is to publish a report on service sector activity, a leading indicator of economic health. Later in the day, the BoE is to announce its official bank rate.
The U.S. is to publish its weekly report on initial jobless claims as well as preliminary data on labor costs and productivity. The country is also to release official data on natural gas inventories. Also Thursday, Fed chair Ben Bernanke is to speak at a public engagement; his comments will be closely watched for any clues to the future possible direction of monetary policy.
Elsewhere, Canada is to publish official data on building permits, a leading gauge of future construction activity. The country will also publish its Ivey PMI, a leading indicator of economic health.
Australia is to publish government data on building approvals, a leading gauge of future construction activity, as well as official data on retail sales, the primary gauge of consumer spending.
In addition, Reserve Bank of New Zealand Governor Alan Bollard is to speak at a public engagement. Meanwhile, markets in Japan will remain closed for a public holiday.
Friday, May 6
The RBA is to publish its monetary policy statement which gives valuable insights into the bank’s view of economic conditions and inflation.
The U.K. is to publish government data on producer price inflation while later in the day, BoE Governor Mervyn King is to speak; his comments will be closely watched or any possible clues to the future direction of monetary policy.
In the euro zone, Germany is to publish official data on industrial production, a leading indicator of economic health. Meanwhile, Switzerland is to publish official data on its unemployment rate.
The U.S. is to publish key government data on non-farm payrolls as well as data on the country’s unemployment rate and average earnings. Also Friday, Canada is to publish government data on employment change and the country’s unemployment rate, while later in the day Bank of Canada Governor, Mark Carney is to speak.
ForexPros.com
