Forex Pros – Last week saw the U.S. dollar close lower against its major counterparts after weak economic data added to concerns that growth is slowing and underlined the view that the Federal Reserve will keep monetary policy loose for some time to come.
On Friday, the National Association of Realtors’ said pending home sales index fell 11.6% in April, much worse that the 1.0% decline forecast. A separate report showed that U.S. customer spending rose just 0.4% last month, less than the expected 0.5% gain.
Earlier in the week, revised data showed that U.S. gross domestic product grew more slowly than forecast in the first quarter, rising at 1.8% annual rate, disappointing expectations for a 2.1% increase.
The euro began the week at a two-month low against the dollar, amid fears that Greece would restructure its debt. However, on Friday, Greek central bank chief George Provopoulos said the country will repay its debts in full without restructuring if it sticks to a fiscal austerity plan.
The single currency also found support after European Central Bank President Jean-Claude Trichet said Thursday that policy makers were monitoring inflation “carefully”, fuelling expectations that the bank will hike interest rates again this year.
The pound closed trading close to a two-week high against the weaker dollar, but data earlier in the week, showing that U.K. household spending saw its sharpest quarterly fall in almost two years in the first quarter, underlined the view that the Bank of England is unlikely to raise interest rates in the coming months.
The Swiss franc was the week’s top performer, as concerns over euro zone sovereign debt issues and the outlook for U.S. growth pushed the currency to record highs against both the euro and the dollar.
Elsewhere, New Zealand’s dollar climbed to a three-year high after Finance Minister Bill English confirmed that China Investment, a sovereign wealth fund, was interested in purchasing the nation’s bonds at auction.
In the week ahead, U.S. markets will be closed on Monday for Memorial Day, while investors will be looking towards Friday’s data on U.S. non-farm payrolls to gauge the strength of the economic recovery. A speech on Thursday by ECB President Jean-Claude Trichet will also be closely watched.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, May 30
New Zealand is to publish official data on its trade balance, the difference in value between imported and exported goods and services. Later in the day, the country is to release official data on building consents, a leading gauge of future construction activity. Australia is to release official data on company operating profits, an important indicator of economic health.
In addition, Canada is to release government data on raw material and factory gate inflation, leading indicators of consumer inflation as well as a report on the nation’s current account.
Meanwhile, markets in the U.S. are to remain closed for Memorial Day, while markets in the U.K. are to remain closed for the Spring Bank Holiday.
Tuesday, May 31
Japan is to publish official data on household spending and average cash earnings, as well as preliminary data on industrial production, a leading indicator of economic health.
Australia is to publish government data on its current account and private sector credit as well as official data on building approvals, an excellent gauge of future construction activity. Meanwhile, New Zealand is to release a report on business confidence, a leading indicator of economic health.
The euro zone is to publish preliminary data on consumer price inflation, which accounts for the majority of overall inflation, as well as a report on the unemployment rate in the single currency bloc. Separately, Germany is to publish official data on unemployment change.
Elsewhere in Europe, Switzerland is to publish official data on first quarter GDP, the broadest measure of economic activity and the primary gauge of the economy’s health. The country is also to publish an index of leading indicators, designed to predict the future direction of the economy.
Later in the day, Canada is to publish government data on GDP, the broadest measure of economic activity. Also Tuesday, the Bank of Canada is to announce its overnight rate. The announcement will be accompanied by the banks rate statement, which contains insights into the economic outlook.
Also Tuesday, the U.S. is to publish industry data on house price inflation and consumer confidence, as well as an index of manufacturing activity in the Chicago area.
Wednesday, June 1
Australia is to publish official data on data on GBP, the broadest measure of economic activity, and commodity prices, which make up over half of the country’s export earnings.
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 publish official data on activity in the manufacturing sector, a leading indicator of economic health.
In the U.K., the Bank of England is to publish official data on net lending to individuals as well as reports on mortgage approvals and M4 money supply. The government is also to publish data on manufacturing activity.
Later Wednesday, U.S. payroll processing firm ADP is to publish its report on non-farm payrolls, which heads up government data by two days. Meanwhile, the Institute of Supply Management is to publish data on manufacturing activity.
Thursday, June 2
Japan is to publish official data on capital spending, a leading indicator of economic health. Australia is to release official data on the country’s trade balance and retail sales, which account for the majority of overall economic activity. Later in the day, New Zealand is to release a government report on building consents, a leading gauge of future construction activity.
In Europe, markets in France, Germany, Italy and Switzerland will remain closed for Ascension Day. Meanwhile, the U.K. is to publish official data on construction sector growth, an important indicator of economic health.
Also Thursday, the U.S. is to publish its weekly report on initial jobless claims, as well as revised data on non-farm productivity and labor costs. The country is also to publish official data on factory orders, a leading indicator of production and a government report on crude oil stockpiles.
Friday, June 3
The U.K. is to publish a report on service sector growth, a leading indicator of economic health.
Meanwhile, the U.S. is to round up the week with a flurry of data, including a government report on non-farm employment change, a big market mover. The U.S. is also to release official data on the overall unemployment rate and average hourly earnings, while the Institute of Supply Management is to publish its index of service sector growth.
ForexPros.com
