Forexpros – The euro tumbled to a six-month low against the U.S. dollar and a 10-year low against the yen on Friday, as the planned resignation of a top European Central Bank policymaker and speculation over a potential Greek default piled selling pressure on the single currency.
The ECB said Friday that Juergen Stark, a member of the central bank’s executive board and its policy-setting governing council, was stepping down. Stark was widely believed to be opposed to the resumption of bond purchases last month and is the second German ECB governing council member to leave this year.
The resignation came a day after ECB President Jean-Claude Trichet said the euro zone economy was facing “particularly high uncertainty and intensified downside risks,” after the bank left its benchmark interest rate unchanged at 1.5%.
The bank also revised down its outlook for economic growth for 2011 and 2012.
Meanwhile, concerns over a possible Greek debt default escalated, after Bloomberg reported that Germany’s government has plans to firewall their country’s banking sector from a default by Athens.
The euro also fell against the Swiss franc on Friday, but remained close to its newly established ceiling closing at 1.2074.
The euro and the dollar both jumped more than 8% against the Swiss franc on Tuesday, after the Swiss National Bank said it would no longer tolerate an exchange rate below 1.20 francs to the euro and pledged to defend that level by buying other currencies in “unlimited quantities.”
The central bank said the massive overvaluation of the franc posed an acute threat to the Swiss economy and carried a risk of deflation.
The dollar was boosted against its major counterparts amid widespread risk aversion and after U.S. President Barack Obama outlined a USD447 billion package of tax cuts on Thursday, which he said would “jolt” the U.S. economy back into growth. Meanwhile, Federal Reserve Chairman Ben Bernanke gave no hint of new stimulus to boost the economy in a keenly awaited speech.
The greenback was also supported by the Swissie’s diminished safe haven status.
Elsewhere, finance ministers and central bankers from the Group of Seven industrialized nations pledged a coordinated response to the global slowdown on Friday, but offered no specific steps to revive growth.
In the week ahead, markets will be focusing on developments in the euro zone and the outcome of the weekend meeting of G7 leaders. Investors will also be watching the release of U.S. data on inflation and manufacturing to gauge the strength of the U.S. recovery.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, September 12
In the euro zone, European Central Bank President Jean-Claude Trichet is to speak; his comments will be closely watched for clues to the future possible direction of monetary policy.
Japan is to publish official data on manufacturing activity and tertiary industry activity, leading indicators of economic health. Meanwhile, the Bank of Japan is to publish the minutes of its most recent monetary policy meeting.
Australia is to release official data on its trade balance, the difference in value between imported and exported goods and services over the month.
Later in the day, Federal Reserve Bank of Dallas President Richard Fisher is to speak.
Tuesday, September 13
Australia is to publish data on business confidence, an important indicator of economic health.
The U.K. is to produce industry data on house prices, an important indicator of economic health. Later in the day, the country is to publish official data on consumer price inflation, which accounts for a majority of overall inflation, as well as official data on the trade balance.
Later Tuesday, the U.S. is to release official data on import prices, an important inflationary indicator. The U.S. is also to publish data on the federal budget balance.
Wednesday, September 14
Australia is to publish a report on consumer sentiment, an important indicator of consumer spending. The country is also to publish official data on housing starts.
Switzerland is to release official data on producer price inflation, a leading indicator of consumer inflation. The U.K. is to publish government data on claimant count change, a leading indicator of economic health, as well as data on average earnings and the unemployment rate. Elsewhere, the euro zone is to publish official data on industrial production.
Canada is to produce official data on the capacity utilization rate. Meanwhile, U.S. Treasury Secretary Timothy Geithner is to speak; his comments will be closely watched by investors. Also Wednesday, the U.S. is to release government data on producer price inflation, crude oil stockpiles, business inventories and retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity.
Thursday, September 15
The Reserve Bank of New Zealand is to announce its benchmark interest rate. The announcement will be followed by a closely watched press conference to discuss monetary policy. Meanwhile, Australia is to publish data on inflation expectations, and new vehicle sales, important indicators of economic health.
Switzerland is to produce government data on industrial production, a leading indicator of economic health. In addition, the Swiss National Bank is to announce is benchmark interest rate. Following the announcement, the bank will release its rate statement, which discusses the economic outlook and offers insights into the outcome of future rate decisions.
The ECB is to publish its monthly bulletin, which contains a detailed analysis of the economic outlook form the bank’s viewpoint. Later in the day, ECB president Jean-Claude Trichet is to speak; his comments will be closely watched by investors.
Also Thursday, the euro zone is to release official data on consumer price inflation, which accounts for a majority of overall inflation.
The U.K. is to publish official data on retail sales and consumer inflation expectations, leading indicators of economic health.
Canada is to release government data on manufacturing sales, an important indicator of economic health.
The U.S. is to publish a string of data, with government reports on consumer price inflation and the nation’s current account, as well as the weekly report on initial jobless claims. The country is also to publish official data on manufacturing activity in New York and Philadelphia in addition to reports on industrial production and the capacity utilization rate.
Friday, September 16
The euro zone is to publish data on the region’s currency account and trade balance.
Elsewhere, Canada is to produce government data on foreign securities purchases.
The U.S. is to round up the week with official data on the balance of domestic and foreign investment in U.S. Treasuries, while the University of Michigan is to release preliminary data on consumer sentiment and inflation expectations.
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