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Forex - Weekly outlook: April 21 - 25

Published 04/20/2014, 04:37 AM
Updated 04/20/2014, 04:37 AM
Dollar ends week higher against yen

Investing.com - The dollar ended the week higher against the yen on Friday as market sentiment was boosted by easing tensions over Ukraine, while upbeat U.S. economic reports also supported the dollar.

USD/JPY touched highs of 102.57 on Friday, before ending the session at 102.40, rising 0.49% for the week. Trade volumes remained thin on Friday, with most markets closed for the Easter weekend, although markets in Tokyo were open.

Concerns over the crisis in eastern Ukraine eased on Thursday after Russia, Ukraine, the U.S. and the European Union said an agreement on steps to "de-escalate" the crisis had been reached.

The dollar also received a boost after upbeat U.S. data on manufacturing and employment on Thursday pointed to underlying strength in the economy.

The Labor Department reported the number of people filing for unemployment benefits edged up to 304,000, below analysts’ forecasts and not far from the six-and-a-half year low of 300,000 touched the previous week.

GBP/USD edged up 0.06% to 1.6798 at Friday’s close, and ended the week 0.45% higher. The pair rose to highs of 1.6840 on Thursday, the strongest since November 18 2009. Sterling strengthened broadly after data earlier in the week showed that the U.K. unemployment rate fell to a five year low of 6.9% in the three months to February.

The upbeat data bolstered expectations that the Bank of England could raise interest rates as soon as the first quarter of 2015.

The euro was little changed against the dollar on Friday, with EUR/USD settling at 1.3810.

The euro’s gains were held in check after recent comments by European Central Bank officials flagged concerns over the impact of the strong currency on the inflation outlook.

On Thursday, ECB Executive Board member Yves Mersch said that if foreign exchange developments with an impact on inflation continue it would trigger a reaction by the central bank.

Elsewhere, the New Zealand dollar posted its largest weekly decline against the greenback since January, with NZD/USD ending the week down 1.24% to 0.8576, ahead of the Reserve Bank’s rate review on Thursday.

In the week ahead, market watchers will be focusing on U.S. data on housing and manufacturing activity, while manufacturing data from China will also be closely watched. The euro zone is to release data on private sector activity, while the U.K. is to produce a report on retail sales.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, April 21

Markets in Australia, New Zealand, the U.K. and the euro zone are to remain closed for Easter Monday. Meanwhile, Japan is to release data on the trade balance.

Tuesday, April 22

Australia is to publish an index of leading economic indicators.

Canada is to produce data on wholesale sales.

The U.S. is to release private sector data on existing home sales.

Wednesday, April 23

Australia is to publish data on consumer price inflation, which accounts for the majority of overall inflation.

China is to release the preliminary estimate of the HSBC manufacturing index, a leading indicator of economic health.

The euro zone is to release preliminary data on manufacturing and service sector activity, a leading indicator of economic health. Germany and France are also to release individual reports.

The U.K. is to release data on public sector borrowing, while the BoE is to publish the minutes of its April meeting. The nation is also to publish private sector data on industrial order expectations.

Canada is to produce official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.

The U.S. is to publish reports on new home sales and manufacturing activity.

Thursday, April 24

The Reserve Bank of New Zealand is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.

In the euro zone, Germany is to release the Ifo report on business climate.

ECB President Mario Draghi is to speak at an event in Amsterdam; his comments will be closely watched.

The U.S. is to publish data on durable goods orders and the weekly report on initial jobless claims.

Friday, April 25

Markets in Australia and New Zealand will be closed for the Anzac Day holiday.

Japan is to release data on consumer inflation.

The U.K. is to produce data on retail sales.

The U.S. is to round up the week with revised data on consumer sentiment.

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