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Forex - Weekly outlook: September 23 - 27
Alex Gray
Publish date: Mon, 23 Sep 2013, 01:56 PM
Alex Gray
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The dollar pushed higher against the other major currencies on Friday after comments by a senior Federal Reserve official indicated that the bank could start to scale back its stimulus program next month.
St. Louis Federal Reserve President James Bullard said the decision not to taper in September was "close" and did not rule out a small reduction in the central bank's bond purchases in October. The comments came during an interview with Bloomberg television.
The dollar pulled back from seven-month lows against the euro following the comments, and touched one-week highs against the yen.
EUR/USD settled at 1.3523 on Friday, dipping 0.05% after rising as high as 1.3567 on Thursday, the highest since February 7. On the week, the pair was 1.4% higher.
USD/JPY hit session highs of 99.67 on Friday, before settling at 99.36, dipping 0.08%. The pair ended the week 0.27% higher, after falling to three-week lows of 97.75 on Wednesday.
The dollar was also higher against the pound, with USD/GBP sliding 0.17% to 1.6003, paring back the week's gains to 0.65%.
The Swiss franc was little changed close to seven-month highs against the dollar on Friday, with USD/CHF settling at 0.9107, down 1.75% for the week.
The dollar weakened across the board on Wednesday after the Federal Reserve said it wanted to see more evidence of a sustained economic recovery before it adjusted the scale of its bond buying program.
The decision surprised markets, which had been expecting the Fed to cut its USD85 billion-a-month stimulus program by USD10 billion to USD15 billion.
In a press conference following the Fed statement, Chairman Ben Bernanke reiterated that the plan to taper asset purchases was never a "preset course," and added that the bank's decision was dependent on how the economic recovery continues to progress.
The central bank also repeated its ongoing goal to keep low interest rates in place until the unemployment rate falls to around 6.5%, as long as inflation doesn't accelerate beyond 2.5% a year.
In the week ahead, uncertainty over the direction of Federal Reserve policy and the decision over Chairman Ben Bernanke's eventual successor look likely to weigh on the dollar.
Investors will also be closely watching the outcome of Sunday's general elections in Germany.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, September 23
Markets in Japan are to remain closed for a national holiday.
China is to release the preliminary reading of its HSBC manufacturing index, a leading economic indicator.
The euro zone is to release preliminary data on manufacturing and service sector activity. Germany and France are to produce individual reports.
European Central Bank President Mario Draghi is to testify about the economy before the Committee on Economic and Monetary Affairs, in Brussels.
Swiss National Bank Chairman Thomas Jordan is to speak at an event in Zurich.
Tuesday, September 24
The Ifo Institute is to release a closely watched report on German business climate, a leading economic indicator.
The U.K. is to release industry data on mortgage approvals, an important indicator of demand in the housing market.
Canada is to produce official 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 private sector data on house price inflation, as well as a closely watched report on consumer confidence.
Wednesday, September 25
New Zealand is to publish official data on the trade balance, the difference in value between imports and exports.
The Reserve Bank of Australia is to publish its bi-annual financial stability review.
The euro zone is to release the results of the Gfk index of consumer climate, an important economic indicator.
The U.K. is to produce private sector data on retail sales.
The U.S. is to release data on durable goods orders, a leading indicator of production, in addition to a report on new home sales.
Thursday, September 26
New Zealand is to release a report on business confidence, a leading economic indicator.
The U.K. is to produce a report on the current account, as well as revised data on second quarter economic growth.
The SNB is to publish its quarterly bulletin, which looks at monetary policy.
The U.S. is to release the weekly report on initial jobless claims, as well as final data on second quarter growth and private sector data on pending home sales.
Friday, September 27
Japan is to release data on consumer price inflation, which accounts for the majority of overall inflation.
In the euro zone, Germany is to produce preliminary data on consumer inflation, while France is to release a report on consumer spending. ECB President Mario Draghi is to speak at an event in Milan.
Switzerland is to publish the KOF economic barometer, which is designed to predict the future direction of the economy.
The U.S. is to round up the week with revised data on consumer sentiment and inflation expectations from the University of Michigan, as well as data on personal income and expenditure.
St. Louis Federal Reserve President James Bullard said the decision not to taper in September was "close" and did not rule out a small reduction in the central bank's bond purchases in October. The comments came during an interview with Bloomberg television.The dollar pulled back from seven-month lows against the euro following the comments, and touched one-week highs against the yen.
EUR/USD settled at 1.3523 on Friday, dipping 0.05% after rising as high as 1.3567 on Thursday, the highest since February 7. On the week, the pair was 1.4% higher.
USD/JPY hit session highs of 99.67 on Friday, before settling at 99.36, dipping 0.08%. The pair ended the week 0.27% higher, after falling to three-week lows of 97.75 on Wednesday.
The dollar was also higher against the pound, with USD/GBP sliding 0.17% to 1.6003, paring back the week's gains to 0.65%.
The Swiss franc was little changed close to seven-month highs against the dollar on Friday, with USD/CHF settling at 0.9107, down 1.75% for the week.
The dollar weakened across the board on Wednesday after the Federal Reserve said it wanted to see more evidence of a sustained economic recovery before it adjusted the scale of its bond buying program.
The decision surprised markets, which had been expecting the Fed to cut its USD85 billion-a-month stimulus program by USD10 billion to USD15 billion.In a press conference following the Fed statement, Chairman Ben Bernanke reiterated that the plan to taper asset purchases was never a "preset course," and added that the bank's decision was dependent on how the economic recovery continues to progress.
The central bank also repeated its ongoing goal to keep low interest rates in place until the unemployment rate falls to around 6.5%, as long as inflation doesn't accelerate beyond 2.5% a year.
In the week ahead, uncertainty over the direction of Federal Reserve policy and the decision over Chairman Ben Bernanke's eventual successor look likely to weigh on the dollar.
Investors will also be closely watching the outcome of Sunday's general elections in Germany.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, September 23
Markets in Japan are to remain closed for a national holiday.
China is to release the preliminary reading of its HSBC manufacturing index, a leading economic indicator.
The euro zone is to release preliminary data on manufacturing and service sector activity. Germany and France are to produce individual reports.
European Central Bank President Mario Draghi is to testify about the economy before the Committee on Economic and Monetary Affairs, in Brussels.
Swiss National Bank Chairman Thomas Jordan is to speak at an event in Zurich.
Tuesday, September 24
The Ifo Institute is to release a closely watched report on German business climate, a leading economic indicator.
The U.K. is to release industry data on mortgage approvals, an important indicator of demand in the housing market.
Canada is to produce official 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 private sector data on house price inflation, as well as a closely watched report on consumer confidence.
Wednesday, September 25
New Zealand is to publish official data on the trade balance, the difference in value between imports and exports.
The Reserve Bank of Australia is to publish its bi-annual financial stability review.
The euro zone is to release the results of the Gfk index of consumer climate, an important economic indicator.
The U.K. is to produce private sector data on retail sales.
The U.S. is to release data on durable goods orders, a leading indicator of production, in addition to a report on new home sales.
Thursday, September 26
New Zealand is to release a report on business confidence, a leading economic indicator.
The U.K. is to produce a report on the current account, as well as revised data on second quarter economic growth.
The SNB is to publish its quarterly bulletin, which looks at monetary policy.
The U.S. is to release the weekly report on initial jobless claims, as well as final data on second quarter growth and private sector data on pending home sales.
Friday, September 27
Japan is to release data on consumer price inflation, which accounts for the majority of overall inflation.
In the euro zone, Germany is to produce preliminary data on consumer inflation, while France is to release a report on consumer spending. ECB President Mario Draghi is to speak at an event in Milan.
Switzerland is to publish the KOF economic barometer, which is designed to predict the future direction of the economy.
The U.S. is to round up the week with revised data on consumer sentiment and inflation expectations from the University of Michigan, as well as data on personal income and expenditure.
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