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Forex - Weekly outlook: November 17 - 21

Published 11/16/2014, 06:05 AM
Updated 11/16/2014, 01:05 PM
Dollar gives up gains against euro in late trade on Friday

Investing.com - The dollar was lower against the euro late Friday after data showed that U.S. inflation expectations fell in an otherwise upbeat report on consumer confidence for this month.

The preliminary reading of the University of Michigan’s consumer sentiment index rose to a seven year high of 89.4, better than forecasts of 87.5 and up from October’s reading of 86.9.

However the report also showed that consumers expected annual inflation of 2.6% this year, down from expectations for inflation of 2.9% in October.

The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, was down 0.25% to 87.61 in late trade, off the four-and-a-half year highs of 88.36 hit earlier in the session.

EUR/USD was up 0.40% to 1.2526 in late trade, after falling to lows of 1.2399 earlier in the session after data showed that U.S. retail sales rose 0.3% in October, ahead of forecasts for a 0.2% increase.

USD/JPY was up 0.44% to 116.28 late Friday, off the seven year highs of 116.82 struck immediately following the release of the U.S. retail sales data.

The euro rose to six year highs against the broadly weaker yen on Friday, with EUR/JPY advancing 0.86% to 145.67 in late trade.

In the euro zone, data on Friday showed that the economy expanded 0.2% in the three months to September and grew 0.6% from the same period a year earlier.

Germany avoided a recession, posting growth of 0.1% in the last quarter, while France grew by a slightly stronger than expected 0.3%. Greece exited a six-year recession, but Italy fell back into recession, posting a contraction of 0.1%.

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The weak growth figures did little to alter expectations for more easing measures from the European Central Bank.

Elsewhere, the Swiss franc rose to 26-month highs against the euro on Friday, with EUR/CHF at 1.2012 in late trade, not far from the Swiss National Bank’s 1.20 exchange rate cap against the single currency.

The Swiss franc has strengthened against the euro in recent sessions ahead of a vote later this month which could force the central bank to increase its gold holdings, a move which could restrict its ability to cap the value of the franc against the euro.

In the week ahead, investors will be focusing on Wednesday’s minutes of the Federal Reserve’s October meeting and Thursday’s report on the U.S. consumer price index. A report on U.K. inflation and euro zone data on private sector activity will also be closely watched.

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

Monday, November 17

Japan is to publish preliminary data on third quarter gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.

In the euro zone, Germany’s Bundesbank is to publish its monthly report. Meanwhile, ECB President Mario Draghi is to testify on monetary policy in the European Parliament in Brussels.

Canada is to release data on foreign securities purchases.

The U.S. is to release a report on manufacturing activity in the New York region, as well as data on industrial production.

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Tuesday, November 18

The Reserve Bank of Australia is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.

Separately, RBA Governor Glenn Stevens is to speak at an event in Melbourne; his comments will be closely watched.

The U.K. is to release data on consumer price inflation, which accounts for the majority of overall inflation.

The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.

The U.S. is to release data on producer price inflation.

Wednesday, November 19

The Bank of Japan is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The bank will hold a press conference following the announcement.

The Bank of England is to publish the minutes of its latest policy meeting.

The U.S. is to release data on building permits and housing starts.

Later Wednesday, the Federal Reserve is to publish the minutes of its October meeting.

Thursday, November 20

Japan is to publish data on the trade balance, the difference in value between imports and exports.

China is to publish the preliminary reading of its HSBC manufacturing index.

Switzerland is to report on its trade balance.

The euro zone is to publish preliminary data on private sector activity, while Germany and France are to also to publish data on private sector growth.

The U.K. is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The U.K. is also to release private sector data on industrial order expectations.

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Canada is to release data on wholesale sales.

The U.S. is to release data on initial jobless claims, consumer prices, existing homes sales and manufacturing activity in the Philadelphia region.

Friday, November 21

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

The U.K. is to release data on public sector borrowing.

Canada is to round up the week with data on consumer price inflation.




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