Investing.com - The euro climbed to a three-week high against the broadly weaker U.S. dollar in holiday-thinned trade on Friday, as market sentiment strengthened after upbeat German economic data and amid new hopes for progress on a deal for Greece.
Trade volumes were light, as U.S. markets closed early for the Thanksgiving weekend.
The euro gained ground after Greece said the International Monetary Fund had relaxed its debt-cutting target for the country, suggesting lenders were closer to a deal for a vital aid tranche to be paid.
However, other sources involved in the talks cautioned that the funding gap was far bigger than Greece has suggested.
Talks between finance ministers and the International Monetary Fund ended without a deal on Tuesday, amid disagreements on how best to reduce the country’s debt to sustainable levels.
Investor confidence also strengthened after the German Institute for Economic Research earlier said that its index of business confidence improved to 101.4 in November from a reading of 100.0 the previous month, beating expectations for a decline to 99.5.
The pound also ended the week at a three-week top against the greenback, after the minutes of the Bank of England’s November meeting published earlier in the week showed that policymakers were split over more monetary easing.
Meanwhile, the yen regained ground against the dollar Friday, but remained close to a seven-month low amid ongoing expectations that upcoming elections on December 16 will result in growing political pressure on the Bank of Japan to implement more aggressive monetary easing measures.
The greenback ended the week at the lowest level since November 7 against the risk sensitive Australian, New Zealand and Canadian dollars.
Official data showed that Canada's core consumer price inflation, which excludes the eight most volatile items, rose 0.3% in October, in line with expectations, after a 0.2% rise the previous month.
Consumer price inflation rose 0.2% last month, as expected, after a 0.2% increase in September.
In the week ahead market participants will be focusing on Monday’s meeting of the euro group of finance ministers to discuss unlocking Greece’s next aid installment.
Markets participants will also monitor developments surrounding the looming “fiscal cliff” in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.
There are fears the U.S. economy will fall back into a recession, unless a divided Congress and the White House can work out a compromise in the seven weeks left before the January 1 deadline.
In addition, the U.S. and U.K. are to release data on third quarter economic growth, amid concerns over the global economic outlook.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, November 26
The Bank of Japan is to publish the minutes of its monetary policy meeting, which contain important insights into current and future economic conditions from the bank’s perspective. In addition, BoJ Governor Masaaki Shirakawa is due to speak at an event in Nagoya.
In Europe, Germany is to release the Gfk report on consumer climate, while Switzerland is to produce official quarterly data on the employment level.
Later in the day, New Zealand is to publish official data on the trade balance, the difference in value between imported and exported goods and services.
Tuesday, November 27
The Reserve Bank of New Zealand is to publish data on inflation expectations.
Switzerland is to publish an index of leading economic indicators, which is designed to predict the future direction of the economy.
Elsewhere, the U.K. is to release revised third quarter gross domestic product data, followed by a preliminary report on business investment, a leading indicator of economic health.
Meanwhile, the U.S. is to release official data on durable goods orders, a leading indicator of production, as well as industry data on house price inflation, an important indicator of demand in the housing sector.
In addition, the Conference Board is to publish data on U.S. consumer confidence, while Federal Reserve Chairman Ben Bernanke is to deliver brief remarks at the National College Fed Challenge Finals, in Washington D.C.
Wednesday, November 28
Australia is to produce official data on construction work done, an important gauge of the construction industry.
In the euro zone, Germany is to release preliminary data on consumer price inflation, which accounts for a majority of overall inflation.
The U.S. is to release official data on new home sales, a leading indicator of economic health, as well as government data on crude oil inventories. Later Wednesday, the Fed is to publish its Beige Book.
Thursday, November 29
Japan is to publish official data on retail sales, the leading measure of consumer spending, which accounts for the majority of overall economic activity.
Elsewhere, New Zealand is to publish a report on business confidence, while Australia is to produce official data on private capital expenditure, a leading indicator of economic health.
In Europe, Switzerland is to publish official data on third quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy's health.
Meanwhile, official data is to be produced on German unemployment change. Separately, Italy is to hold a ten-year government bond auction.
In the U.K., Bank of England Governor Mervyn King is due to speak before the release of the central bank’s financial stability report. The BoE is also slated to publish a report on net lending to individuals.
Later in the day, the U.S. is to produce revised data on third quarter gross domestic product, as well as data on pending home sales and initial jobless claims.
Also Thursday, Canada is to release official data on the current account, as well as government data on raw material price inflation, a leading indicator of consumer inflation.
Friday, November 30
Japan is to publish official data on household spending, as well as a preliminary report on industrial production. The country is also expected to produce data on the unemployment rate and on consumer price inflation, which accounts for the majority of overall inflation.
Australia is to produce official data on private sector credit.
The euro zone is to publish preliminary data on consumer price inflation, which accounts for the majority of overall inflation, as well as data on the unemployment rate in the bloc.
In addition, Germany is to produce government data on retail sales, a leading indicator of economic health, while France is to release a report on consumer spending.
Elsewhere in Europe, Switzerland is to publish its KOF economic barometer, designed to predict the future direction of the economy.
Later Friday, the U.S. is to release government data on personal income, personal spending and core consumer inflation. The U.S. is also to publish official data on manufacturing activity in Chicago.
Canada is to publish official data on monthly GDP growth, a leading indicator of economic health.