Investing.com - The dollar gained ground against a basket of other major currencies on Friday as a steep drop in oil prices fuelled fears over the risk of deflation in Japan and the euro zone and pressured commodity exposed currencies lower.
Oil prices tumbled following Thursday’s decision by the Organization of the Petroleum Exporting Countries to keep production quotas unchanged, fuelling fears over a global supply glut.
The US Dollar Index, which measures the greenback against a basket of six major currencies, was up 0.45% to 88.41 late Friday, not far from the four-year highs of 88.52 set on Monday.
USD/JPY was up 0.73% to 118.59 in late trade, nearing the seven-year peaks of 118.96 struck on November 20.
EUR/USD dipped 0.11% to 1.2451 late Friday, approaching Monday’s two year lows of 1.2359.
In the euro zone, data on Friday showed that the annual rate of inflation slowed to a five year low of 0.3% in November. The weak data was seen as increasing the likelihood that the European Central Bank will implement quantitative easing measures.
The slump in oil prices drove the Russian rouble to record lows against the dollar and the euro, with USD/RUB up 2.04% to 50.28 and EUR/RUB advancing 2.23% to 62.60 in late trade.
The commodity linked Canadian dollar fell to three-week lows against the greenback, with USD/CAD rising 0.74% to 1.1414, while the Norwegian krone fell to its lowest level in five years, with USD/NOK up 1.5% to 7.03.
The selloff in oil overshadowed data Friday showing that Canada’s gross domestic product expanded at an annual rate of 2.8% in the third quarter as exports rose 2.2%. Economists had forecast third quarter growth of 2.1%.
Demand for the dollar continued to be underpinned by expectations that the Federal Reserve is moving closer to raising interest rates, as central banks in Japan and the euro zone are easing monetary policy to spur growth and stave off the threat of deflation.
In the week ahead investors will be focusing on the outcome of a policy meeting of the ECB on Thursday, which is to be followed by the U.S. jobs report for November on Friday. Central banks in the U.K., Canada and Australia are also to hold policy setting meetings next week.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, December 1
China is to release official data on manufacturing activity, as well as the HSBC manufacturing index.
The U.K. is to publish its manufacturing index as well as data on net lending to individuals.
In the U.S., the Institute of Supply Management is to release data on manufacturing activity.
Tuesday, December 2
Australia is to release data on building approvals and the current account. Later in the day, the Reserve Bank of Australia 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, Spain is to release data on the change in the number of people employed.
The U.K. is to publish a report on construction sector activity.
Wednesday, December 3
Australia is to publish a report on GDP, the broadest indicator of economic activity and the leading indicator of economic growth.
China is to release official data on service sector activity, as well as the HSBC services index.
The U.K. is to release what will be a closely watched report on service sector growth.
The euro zone is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
The U.S. is to release the ADP report on private sector job creation.
The Bank of Canada is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
Later Thursday, the ISM is to publish a report on U.S. service sector activity.
Thursday, December 4
Australia is to publish data on retail sales and the trade balance, the difference in value between imports and exports.
The U.K. is to publish private sector data on house price inflation.
The Bank of England is to announce its benchmark interest rate.
Later in the day, the ECB is to announce its benchmark interest rate. The announcement is to be followed by a press conference with President Mario Draghi.
The U.S. is to release the weekly report on initial jobless claims.
Canada is to publish its Ivey PMI.
Friday, December 5
In the euro zone, Germany is to release data on factory orders.
The Swiss National Bank is to publish data on its foreign currency reserves. This data is closely scrutinized for indications of the size of the bank’s operations in currency markets.
Canada is to publish data on the change in the number of people employed and the unemployment rate, as well as a separate report on the trade balance.
The U.S. is to round up the week with the closely watched government report on nonfarm payrolls, the unemployment rate and average earnings, as well as a report on factory orders.