The EUR extended losses into a second day on Friday after ECB chief Mario Draghi said the bank would closely monitor developments in the markets to see if the stronger euro had an effect on the inflation outlook. Draghi said the recent appreciation in the single currency reflected growing signs of a return of investor confidence in the euro zone and added that the exchange rate was not a policy target. Speaking at the bank’s post-policy meeting press conference, Draghi said that economic weakness in the euro are would persist during the early part of 2013 but said the economy should start to recover “later” in the year. The ECB left interest rates at 0.75% on Thursday, in line with market expectations. EUR/USD hit a session low of 1.3354 on Friday before settling at 1.3369, down 0.22% for the day and 1.06% lower for the week.
The GBP gained ground against the dollar and the euro on Friday after incoming Bank of England Governor Mark Carney downplayed the possibility of a major change to current monetary policy. The BoE left interest rates on hold at 0.5% on Thursday and said that it remained ready to provide further stimulus if necessary. GBP/USD hit a session high of 1.5844 on Friday before settling at 1.5798, up 0.54% for the day and 0.26% higher for the week. Elsewhere, EUR/GBP hit a session low of 0.8447 before settling back at 0.8462, down 0.76% for the day and down 1.32% for the week.
The yen was higher against the dollar and the euro after Japan’s Finance Minister Taro Aso said the dollar has “abruptly risen to the JPY90 level…in a manner we didn’t anticipate.” The comments raised doubts over whether the government is comfortable with the recent steep decline in the yen, but the currency looked likely to remain under pressure as expectations for more aggressive monetary easing measures remained intact. USD/JPY hit a low of 92.17 on Friday before settling back to 92.71, down 0.99% for the day, but still up 0.59% for the week. EUR/JPY fell to a session low of 123.44 before settling at 123.92, down 1.22% on the day and 0.48% lower for the week.
Monday, February 11
Markets in Japan and China are to remain closed for national holidays. In the euro zone, France is to publish official data on industrial production. In addition, the eurogroup of euro zone finance ministers is to hold talks in Brussels.
Tuesday, February 12
Australia is to release data on business confidence, while markets in China are to remain closed for a national holiday. The U.K. is to publish official data on consumer prices, which account for a majority of overall inflation as well as industry data on house prices. Switzerland is also to publish government data on consumer inflation. In the euro zone, the Economic and Financial Affairs Council is to hold talks in Brussels. Later in the day, the U.S. is to publish data on the federal budget balance.
Wednesday, February 13
Australia is to publish a report on consumer sentiment, a leading indicator of consumer spending. Japan is to release data on tertiary industry activity, a leading indicator of economic health. Elsewhere, markets in China are to remain closed for a national holiday. Switzerland is to release official data on producer prices, a leading indicator of consumer inflation. The euro zone is to produce data on industrial production. In the U.K., the BoE is to release its quarterly inflation report, which includes forecast for inflation over the following two years. The release is to be followed by a press conference with BoE Governor Mervyn King. Later in the day, the U.S. is to publish official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The U.S. is also to publish data on import prices, business inventories and crude oil stockpiles.
Thursday, February 14
Japan is to publish preliminary data on fourth quarter gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health. The BoJ is to announce its benchmark interest rate. The rate announcement is to be accompanied by the bank’s rate statement, which contains important insights into current and future economic conditions from the bank’s perspective. The central bank is to hold a press conference to discuss the monetary policy decision after the rate announcement. Markets in China are to remain closed for a national holiday. The euro zone is to release preliminary data on fourth quarter growth, while Germany, rance and Italy are also to publish individual reports. The ECB is to publish its monthly ulletin, which details economic conditions from the bank’s perspective. In addition, Italy and France are to hold auctions of 10-year government bonds. The U.S. is to release the weekly government report on initial jobless claims. Later in the day, New Zealand is to publish official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
Friday, February 15
In China markets are to remain closed for a national holiday. The euro zone is to publish data on the trade balance, while Spain is to hold an auction of 10-year government bonds. The U.K. is to release government data on retail sales. Canada is to release official data on manufacturing sales, a leading indicator of economic health. The U.S. is to round up the week with data on manufacturing activity in New York state and industrial production, while the University of Michigan is to release preliminary data on consumer sentiment and inflation expectations.
EasyForexNews Research Team