Forex - Weekly outlook: February 13 - 17
Investing.com
Published Feb 12, 2012 04:32AM ET
Investing.com - The euro was down against the U.S. dollar on Friday, paring some of the week’s gains as uncertainty over whether Greece’s parliament would approve a vote on austerity measures in order to secure a second bailout weighed.
On Thursday, Greek political leaders reached a long awaited consensus on the conditions set by international creditors in exchange for a new bailout worth EUR130 billion. However, Greece’s parliament must now approve the proposed spending cuts before the country’s lenders will release the aid package.
The euro had been supported earlier in the week, rising to an eight-week high against the greenback, amid expectations that Greece would satisfy the demands necessary to secure its bailout deal and avert a disorderly default.
The single currency also found support after European Central Bank President Mario Draghi said Thursday that recent economic data had confirmed “signs of stabilization” in the region. The ECB held interest rates at 1% at its policy meeting on Thursday, in line with expectations.
The euro was also lower against the yen on Friday, pulling back from a two-month high, while the greenback surrendered gains against the yen after rising to a two-week high on Thursday.
Despite the greenback’s gains, Japanese Finance Minister Jun Azumi said Friday that the rise in the currency appeared "one-sided" and said "decisive steps" could be taken to halt the movement and added that he had "strong concerns" the rally had lost touch with economic reality in Japan.
Elsewhere, the euro was lower against the Swiss franc, after climbing above the 1.21 level against the franc for the first time in three weeks on Wednesday. The euro’s gains came after the acting head of the Swiss National Bank Thomas Jordan said the 1.20 exchange rate cap on the franc was the most effective instrument the SNB had to protect the Swiss economy and reiterated a pledge to defend it.
Meanwhile, the pound was down against the greenback on Friday, but gained ground against the broadly weaker euro, despite a fresh round of quantitative easing announced by the Bank of England on Thursday.
The pound remained supported after BoE policymakers said recent economic data indicated an improved outlook for the U.K. economy and added that they expected inflation to fall below 2% in the medium term without more monetary easing.
The Australian dollar posted its first weekly loss in two months against the greenback, falling more than 1% on Friday, after the Reserve Bank of Australia revised down its forecast for economic growth and inflation this year.
The RBA said it now sees the economy expanding 3.5% in 2012, down from its November forecast for 4% growth. The Aussie rallied to a six-month high earlier in the week after the RBA left its benchmark interest rate unchanged at 4.5% in a surprise decision.
In the week ahead, euro zone finance ministers are expected to meet on Tuesday to discuss Greece’s bailout deal, which should lead to a final approval by the country’s international lenders, including the International Monetary Fund and the ECB.
Investors will also be awaiting preliminary data on euro zone gross domestic product and U.S. retail sales, to assess the impact of the fiscal crisis in the euro zone on global growth.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, February 13
Japan is to produce preliminary data on GDP, the broadest measure of economic activity and the primary gauge of the economy’s health. The country is also to release preliminary data on the GDP price index, followed by industry data on tertiary industry activity, a leading indicator of economic health.
Meanwhile, Australia is to publish official data on home loans, a key indicator of demand in the housing market.
Also Monday, Switzerland is to release official data on producer price inflation, an important gauge of consumer inflation.
Tuesday, February 14
Australia is also to publish industry data on business confidence, a key indicator of economic health. Meanwhile, New Zealand is to release industry data on house price inflation, a leading signal of the housing industry’s health.
Elsewhere, the U.K. is to publish industry data on house price balance, a key gauge of housing inflation, as well as report on consumer price inflation, which accounts for a majority of overall inflation. The country is also to produce official data on retail price inflation, followed by the BoE inflation report.
The Bank of Japan is to release its monetary policy statement as well as its overnight call rate, followed by a press conference. The press conference will be closely watched for possible hints to the future direction of monetary policy.
In the euro zone, France is to publish preliminary data on non-farm payrolls, an important indicator of consumer spending. In addition, the ZEW Centre for Economic Research is to publish reports on economic sentiment in Germany and the wider euro zone.
Also Tuesday, the U.S. is to produce official data on retail sales, as well as reports on import prices and business inventories, a signal of future business spending. U.S. Treasury Secretary Timothy Geithner is also due to speak later in the day.
Wednesday, February 15
New Zealand is to release official data on retail sales. Meanwhile, Australia is to publish a report by the Westpac Banking Corporation on consumer sentiment, as well as official data on new motor vehicle sales, a sign of consumer confidence.
The BoJ is to release its monthly report, which provides investors with a detailed analysis of current and future economic conditions, from the bank’s perspective.
The U.K. is to produce official data on the claimant count change, an important signal of overall economic health, as well as a report on the unemployment rate. Later in the day, the BoE is to publish its Inflation Report, which provides valuable insight into the bank's view of economic conditions and inflation. Governor Mervyn King is due to hold a press conference to discuss the report.
Switzerland is to produce data on ZEW economic expectations, a leading gauge of economic health.
In the euro zone, France and Germany are to publish preliminary reports on their respective GDPs. Preliminary data is also to be released on the GDP of the single currency bloc. Meanwhile, European finance ministers are scheduled to hold talks throughout the day.
The U.S. is to release a report on the Empire State Manufacturing index, a leading indicator of economic health, followed by data on net foreign purchases of long-term securities. The Federal Reserve is also to publish data on its capacity utilization rate, an important indicator of consumer inflation, as well as on industrial production before releasing the minutes of its latest policy meeting later in the day. The country is also to produce an official report on crude oil stockpiles.
Thursday, February 16
Australia is to publish industry data on inflation expectations, followed by official data on employment change and the unemployment rate.
Meanwhile, the ECB is to release its monthly bulletin, which provides investors with a detailed analysis of current and future economic conditions, from the bank’s perspective.
In Canada, official data is to be released on foreign security purchases, as well as on manufacturing sales, a leading indicator of economic health.
The U.S. is to publish government data on building permits, an important gauge of future construction activity, and housing starts, as well as reports on producer price inflation and unemployment claims. In addition, the country is to produce data on manufacturing activity in the Philadelphia area. Later in the day, Fed Chairman Ben Bernanke is due to speak.
Friday, February 17
In New Zealand the Governor of the central bank Alan Bollard is scheduled to speak; his comments will be closely watched for clues to the future possible direction of monetary policy. Meanwhile, the BoJ is to release the minutes of its latest policy setting meeting.
Elsewhere, the U.K. is to publish a report by the Nationwide Building Society on consumer confidence, followed by official data on retail sales.
Canada is to produce official data on consumer price inflation as well as on the country’s leading index, which is a combined reading of 10 economic indicators.
The U.S. is to round up the week with a government report on consumer price inflation.
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On Thursday, Greek political leaders reached a long awaited consensus on the conditions set by international creditors in exchange for a new bailout worth EUR130 billion. However, Greece’s parliament must now approve the proposed spending cuts before the country’s lenders will release the aid package.
The euro had been supported earlier in the week, rising to an eight-week high against the greenback, amid expectations that Greece would satisfy the demands necessary to secure its bailout deal and avert a disorderly default.
The single currency also found support after European Central Bank President Mario Draghi said Thursday that recent economic data had confirmed “signs of stabilization” in the region. The ECB held interest rates at 1% at its policy meeting on Thursday, in line with expectations.
The euro was also lower against the yen on Friday, pulling back from a two-month high, while the greenback surrendered gains against the yen after rising to a two-week high on Thursday.
Despite the greenback’s gains, Japanese Finance Minister Jun Azumi said Friday that the rise in the currency appeared "one-sided" and said "decisive steps" could be taken to halt the movement and added that he had "strong concerns" the rally had lost touch with economic reality in Japan.
Elsewhere, the euro was lower against the Swiss franc, after climbing above the 1.21 level against the franc for the first time in three weeks on Wednesday. The euro’s gains came after the acting head of the Swiss National Bank Thomas Jordan said the 1.20 exchange rate cap on the franc was the most effective instrument the SNB had to protect the Swiss economy and reiterated a pledge to defend it.
Meanwhile, the pound was down against the greenback on Friday, but gained ground against the broadly weaker euro, despite a fresh round of quantitative easing announced by the Bank of England on Thursday.
The pound remained supported after BoE policymakers said recent economic data indicated an improved outlook for the U.K. economy and added that they expected inflation to fall below 2% in the medium term without more monetary easing.
The Australian dollar posted its first weekly loss in two months against the greenback, falling more than 1% on Friday, after the Reserve Bank of Australia revised down its forecast for economic growth and inflation this year.
The RBA said it now sees the economy expanding 3.5% in 2012, down from its November forecast for 4% growth. The Aussie rallied to a six-month high earlier in the week after the RBA left its benchmark interest rate unchanged at 4.5% in a surprise decision.
In the week ahead, euro zone finance ministers are expected to meet on Tuesday to discuss Greece’s bailout deal, which should lead to a final approval by the country’s international lenders, including the International Monetary Fund and the ECB.
Investors will also be awaiting preliminary data on euro zone gross domestic product and U.S. retail sales, to assess the impact of the fiscal crisis in the euro zone on global growth.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, February 13
Japan is to produce preliminary data on GDP, the broadest measure of economic activity and the primary gauge of the economy’s health. The country is also to release preliminary data on the GDP price index, followed by industry data on tertiary industry activity, a leading indicator of economic health.
Meanwhile, Australia is to publish official data on home loans, a key indicator of demand in the housing market.
Also Monday, Switzerland is to release official data on producer price inflation, an important gauge of consumer inflation.
Tuesday, February 14
Australia is also to publish industry data on business confidence, a key indicator of economic health. Meanwhile, New Zealand is to release industry data on house price inflation, a leading signal of the housing industry’s health.
Elsewhere, the U.K. is to publish industry data on house price balance, a key gauge of housing inflation, as well as report on consumer price inflation, which accounts for a majority of overall inflation. The country is also to produce official data on retail price inflation, followed by the BoE inflation report.
The Bank of Japan is to release its monetary policy statement as well as its overnight call rate, followed by a press conference. The press conference will be closely watched for possible hints to the future direction of monetary policy.
In the euro zone, France is to publish preliminary data on non-farm payrolls, an important indicator of consumer spending. In addition, the ZEW Centre for Economic Research is to publish reports on economic sentiment in Germany and the wider euro zone.
Also Tuesday, the U.S. is to produce official data on retail sales, as well as reports on import prices and business inventories, a signal of future business spending. U.S. Treasury Secretary Timothy Geithner is also due to speak later in the day.
Wednesday, February 15
New Zealand is to release official data on retail sales. Meanwhile, Australia is to publish a report by the Westpac Banking Corporation on consumer sentiment, as well as official data on new motor vehicle sales, a sign of consumer confidence.
The BoJ is to release its monthly report, which provides investors with a detailed analysis of current and future economic conditions, from the bank’s perspective.
The U.K. is to produce official data on the claimant count change, an important signal of overall economic health, as well as a report on the unemployment rate. Later in the day, the BoE is to publish its Inflation Report, which provides valuable insight into the bank's view of economic conditions and inflation. Governor Mervyn King is due to hold a press conference to discuss the report.
Switzerland is to produce data on ZEW economic expectations, a leading gauge of economic health.
In the euro zone, France and Germany are to publish preliminary reports on their respective GDPs. Preliminary data is also to be released on the GDP of the single currency bloc. Meanwhile, European finance ministers are scheduled to hold talks throughout the day.
The U.S. is to release a report on the Empire State Manufacturing index, a leading indicator of economic health, followed by data on net foreign purchases of long-term securities. The Federal Reserve is also to publish data on its capacity utilization rate, an important indicator of consumer inflation, as well as on industrial production before releasing the minutes of its latest policy meeting later in the day. The country is also to produce an official report on crude oil stockpiles.
Thursday, February 16
Australia is to publish industry data on inflation expectations, followed by official data on employment change and the unemployment rate.
Meanwhile, the ECB is to release its monthly bulletin, which provides investors with a detailed analysis of current and future economic conditions, from the bank’s perspective.
In Canada, official data is to be released on foreign security purchases, as well as on manufacturing sales, a leading indicator of economic health.
The U.S. is to publish government data on building permits, an important gauge of future construction activity, and housing starts, as well as reports on producer price inflation and unemployment claims. In addition, the country is to produce data on manufacturing activity in the Philadelphia area. Later in the day, Fed Chairman Ben Bernanke is due to speak.
Friday, February 17
In New Zealand the Governor of the central bank Alan Bollard is scheduled to speak; his comments will be closely watched for clues to the future possible direction of monetary policy. Meanwhile, the BoJ is to release the minutes of its latest policy setting meeting.
Elsewhere, the U.K. is to publish a report by the Nationwide Building Society on consumer confidence, followed by official data on retail sales.
Canada is to produce official data on consumer price inflation as well as on the country’s leading index, which is a combined reading of 10 economic indicators.
The U.S. is to round up the week with a government report on consumer price inflation.
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Written By: Investing.com
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