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Forex - Weekly outlook: June 6-10

Published 06/05/2011, 04:19 AM
Updated 06/05/2011, 04:19 AM

Investing.com – The U.S. dollar slumped to a one-month low against the euro last week, as weak U.S. employment data added to concerns that the U.S. recovery is faltering, while the shared currency was boosted by hopes that Greece will be able to avoid restructuring its debt.

The euro rose broadly on Friday, after the European Union, the European Central Bank and the International Monetary Fund said the next tranche of international aid for Greece should be available in July. Greece’s government said a review of the country’s economic progress concluded “positively.”

Meanwhile, the U.S. Department of Labor said nonfarm payrolls rose much less-than-expected in May, increasing by just 54K as the private sector posted the smallest jobs gain in nearly a year. Analysts had expected nonfarm payrolls to rise by 169K last month.

The unemployment rate unexpectedly rose to 9.1% from 9.0% in April.

The report came after U.S. data earlier in the week showed that manufacturing activity slumped to a one-year low in May, while consumer confidence dropped to a six-month low.

Moody’s Investors Service said Thursday it may place the U.S. government’s rating under review for possible downgrade based on progress by Congress and the Obama administration on increasing the statutory debt limit in coming weeks.

The dollar tumbled to an all-time low against the Swiss franc and a five-week trough against the yen as concerns over a slowdown in the U.S. economy boosted demand for the traditional safe haven currencies.

But the pound ended the week lower against the dollar after a week of largely worse-than-expected U.K. data emphasized the view that the Bank of England will keep interest rates low for some months to come. One BoE policymaker even suggested the need for a fresh round of quantitative easing this week.

The ECB is to hold its rate-setting meeting next week, where it is widely expected to signal a July interest-rate hike. The Federal Reserve, meanwhile, is expected to keep rates on hold for the rest of the year, a view reinforced by Friday's jobs data.

Also next week, the BoE is to announce its official cash rate, while central banks in Australia and New Zealand are also to announce their benchmark interest rates.

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

Monday, June 6

Australia is to publish data on the number of jobs advertized in major daily newspapers and websites, an important indicator of strength in the employment market. The country is also to publish an inflation gauge, while markets in New Zealand are to remain closed in observance of the Queen’s birthday.

In the euro zone, Germany is to publish official data on factory orders, a leading indicator of production. The euro zone is also to publish official data on producer price inflation and investor confidence.

Later in the day, Canada is to publish government data on building permits, an excellent gauge of future construction. The country is also to publish a report on manufacturing growth, a leading indicator of economic health.

Tuesday, June 7

The Reserve Bank of Australia is to announce its cash rate. The announcement will be accompanied by the banks rate statement which discusses the economic outlook and offers clues on the outcome of future interest rate decisions.

Switzerland is to publish government data on consumer price inflation, which accounts for a majority of overall inflation.

Meanwhile, 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, as well as data on German factory orders, a leading indicator of economic health.

Later in the day, the U.S. is to publish official data on consumer credit, which is correlated with consumer confidence and spending. Also Tuesday, Federal Reserve Chairman Ben Bernanke is to speak; his comments will be closely watched for any clues to the future possible direction of monetary policy.

Wednesday, June 8

Australia is to publish official data on home loans, a leading indicator of demand in the housing market, as well as a report on consumer sentiment, a leading indicator of consumer spending.

Japan is to publish official data on bank lending, the nation’s current account and M2 money supply as well as an index of current economic conditions.

The euro zone is to publish revised data on first quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy's health, while Germany is to publish official data on industrial production, a leading indicator of economic health. Meanwhile, Switzerland is to publish official data on the unemployment rate.

Canada is to release government data on housing starts, a leading indicator of economic health.

Later in the day, the U.S. is to publish official data on crude oil inventories while the Federal Reserve is to publish its Beige Book, which gives insights into the data policymakers looked at when making their interest rate decision.

Thursday, June 9


The Reserve Bank of New Zealand is to announce its official cash rate. The interest rate announcement will be followed by a closely watched press conference to discuss monetary policy. Later in the day, RBNZ Governor Alan Bollard is to speak; his comments will be closely watched for any clues to the future possible direction of monetary policy.

Australia is to publish government data on employment change and the unemployment rate, leading indicators of economic health.

Elsewhere, Japan is to publish revised data on first quarter GDP, as well as a report on household confidence and preliminary data on machine tool orders.

The U.K. is to release official data on the trade balance, the difference in value between imported and exported goods and services. Later in the day, the BoE is to announce its official cash rate. The ECB is also to announce its minimum bid rate. The announcement will be followed with a closely watched press conference by ECB President Jean-Claude Trichet.

Also Thursday, Canada and the U.S. are to publish official data on their respective trade balances. Canada is also to publish government data on house price inflation, while the U.S. is to release its weekly report on initial jobless claims.

Friday, June 10

Japan is to publish an index of tertiary industry activity, a leading indicator of economic health. Elsewhere, RBNZ Governor Alan Bollard is to speak; his comments will be closely watched for any clues to the future possible direction of monetary policy.

In the euro zone, France is to publish official data on industrial production, a leading indicator of economic health. Meanwhile, Germany is to publish revised data on consumer and wholesale price inflation.

The U.K. is to publish official data on manufacturing production, a leading indicator of economic health. The country is also to publish official data on industrial production and producer price inflation input. Also Friday, the BoE is to release a report on consumer inflation expectations.

Later in the day, the U.K. National Institute of Economic and Social Research is to publish its estimate of second quarter GDP, in an effort to predict government compiled data.

In addition, Canada is to release official data on employment change, the unemployment rate and labor productivity, leading indicators of economic health.

The U.S. is to round up the week with official data on import prices, which contribute to overall inflation, while the Federal Reserve is to publish a report on the federal budget balance.

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