Forexpros – The U.S. dollar ended the week little changed against the euro on Friday, but was lower against the safe haven yen as investors awaited the outcome of Sunday’s elections in Greece, which could determine if the country remains in the euro zone.
The euro remained supported by expectations that world central banks would implement measures to calm market turmoil in the event of a victory for anti-bailout parties in the Greek elections.
On Friday, the European Central Bank said it would continue to supply liquidity to banks as necessary, one day after the Bank of England announced an emergency liquidity package to support the U.K. banking system.
Elsewhere, the yield on Spanish 10-year bonds climbed to a euro-era high on Thursday, after ratings agency Moody’s cut the country’s credit rating by three notches to just above junk status, citing its rising debt burden and weakening economy.
The spike in borrowing costs came in spite of efforts to insulate Madrid from the effects of the ongoing sovereign debt crisis by agreeing on a EUR100 billion aid package for Spanish banks.
Spanish 10-year bond yields eased back to settle at 6.87% on Friday, but remained close to the critical 7% threshold which prompted bailouts in Greece, Ireland and Portugal.
The yen remained well supported after the Bank of Japan decided not to extend or increase any of its monetary easing measures at its policy setting meeting on Friday.
The greenback was weighed by growing expectations that the Federal Reserve may announce fresh stimulus measures following its meeting next week after a recent string of weak economic data.
Data on Friday showed that U.S. consumer sentiment fell to a six-month low in June, fuelling concerns that economic growth is faltering. Separate reports showed that an index of manufacturing activity in New York dropped sharply in June, while U.S. manufacturing output fell in May for the second time in three months.
The pound was sharply higher against the greenback and the euro on Friday, boosted higher by the BoE’s initiative to shield the U.K. economy from the effects of the crisis in the euro zone.
Elsewhere, the New Zealand dollar ended the week trading close to a five-week high against the broadly weaker greenback after the Reserve Bank of New Zealand kept its benchmark interest rate unchanged at 2.5%.
In the week ahead, investor sentiment is likely to be decided by the outcome of Sunday’s elections in Greece, while a G-20 summit due to start Monday may produce fresh measures to combat the crisis in Europe.
Meanwhile, market participants will be closely watching the outcome of the Federal Reserve’s monetary policy meeting on Wednesday, as well as U.K. data on inflation and retail sales amid speculation over whether the BoE will announce more monetary easing.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, June 18
New Zealand is to release industry data on consumer sentiment, a leading indicator of consumer spending, while Australia is to produce official data on new motor vehicle sales, an important sign of consumer confidence.
Elsewhere, the U.K. is to publish an industry report on house price inflation, a key indicator of the housing industry’s health.
Later in the day, Canada is to release official data on foreign security purchases. In addition, leaders from the Group of 20 nations are to begin a two-day summit in Mexico.
Tuesday, June 19
The Reserve Bank of Australia is to publish the minutes of its June policy-setting meeting.
The U.K. is to publish official data on data on consumer price inflation, which accounts for the majority of overall inflation, followed by a report on consumer confidence.
In the euro zone, the ZEW Institute is to release reports on economic sentiment in Germany and the whole euro area.
Meanwhile, Canada is to produce official data on wholesale sales, a leading indicator of consumer spending. The U.S. is to publish official reports on building permits and housing starts, leading indicators of health in the housing sector.
Leaders from the Group of 20 nations are to hold a second day of talks at a summit in Mexico.
Wednesday, June 20
New Zealand is to release official data on the country’s current account, while Australia is to publish results of the Conference Board’s leading index, followed by the Melbourne Institute’s leading index.
The BoJ is to produce the minutes of its June policy meeting. Japan is also to release government data on the trade balance, which is the difference in value between imported and exported goods.
In the euro zone, Germany is to release official data on producer price inflation, a leading indicator of consumer inflation.
The U.K. is to publish official data on claimant count change and the unemployment rate, while the BoE is also to publish the minutes of its June policy-setting meeting.
Switzerland is to publish a ZEW report on economic expectations, a key indicator of economic health.
Later Wednesday, the Federal Reserve is to announce its benchmark interest rate and publish its rate statement and economic projections. The data is to be followed by a press conference with Fed Chairman Ben Bernanke to discuss the monetary policy decision. The U.S. is also to release government data on crude oil stockpiles
Thursday, June 21
New Zealand is to publish official data on fourth-quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy’s health.
The euro zone is to release preliminary data on manufacturing and service sector activity, while Germany and France are also to release individual reports. Later in the day, ECB President Mario Draghi is due to speak; his comments will be closely watched.
Elsewhere in Europe, Switzerland is to produce official data on trade balance and industrial production.
The U.K. is to publish official data on retail sales, the primary gauge of consumer spending, and industry data on industrial order expectations.
Later Thursday, Canada is also to release official data on retail sales.
The U.S. is to produce government data on unemployment claims, followed by preliminary data on manufacturing activity and an industry report on existing home sales. The country is also to release data on manufacturing activity in the Philadelphia area.
Friday, June 22
The euro zone is to produce a report by the Ifo Institute of Economic Research on Germany’s business climate, a key indicator of economic health. Meanwhile, finance ministers from European Union member states are set to hold talks in Brussels.
Canada is to round up the week with official data on consumer price inflation.