U.S. And U.K. Public Holidays Imply Thin Volumes For Monday

The euro ended the day little changed against the dollar, as safe haven demand was bolstered by uncertainty whether the Federal Reserve will scale back its easing program this year. The euro hit session highs after data showed that Germany’s business climate Ifo index rose to 105.7 from 104.4 in April. Analysts had expected the index to tick up to 104.5. On Friday, investors shrugged off data indicating that the U.S. durable goods orders rose 3.3% in April, outstripping expectations for a 1.5% increase. Volumes look likely to remain thin on Monday, with public holidays in the U.K. and the U.S. running into a long weekend. Investors will be looking ahead for U.S. data on the housing sector, consumer confidence and initial jobless claims. The eurozone is to release data on consumer inflation and the unemployment rate.
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GBP/USD
The pound was little changed against the dollar on Friday, as uncertainty over whether the Federal Reserve will scale back its easing program this year supported safe haven demand. On Friday, investors shrugged off data which indicated that U.S. durable goods orders rose 3.3% in April, outstripping expectations for a 1.5% increase. The pound found some support after official data on Thursday confirmed that the U.K. economy expanded by 0.3% in the first quarter, and grew 0.6% from a year earlier, unchanged from the preliminary estimate. In the week ahead, volumes look likely to remain thin on Monday, with public holidays in the U.K. and the U.S. running into a long weekend.
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USD/JPY
The dollar ended the week sharply lower against the yen, amid speculation that the Federal Reserve will scale back its asset purchase program this year. The dollar rose to fresh four-and-a-half year highs against the yen earlier Wednesday after Bernanke stated that a premature tightening of monetary policy carried substantial risks to the economic recovery. The dollar hit a two-week low against the yen on Friday, after official data showed that the U.S. durable goods orders rose 3.3% in April, outstripping expectations for a 1.5% increase. The Bank of Japan left monetary policy unchanged following its policy meeting on Wednesday, in a widely expected decision. The bank also upgraded its economic outlook, saying growth had started picking up. Also on Wednesday, official data showed that Japan posted a trade deficit of JPY0.76 trillion in April for the tenth consecutive month. Exports rose 3.8% from a year earlier, while imports were up 9.4%. Investors will be looking ahead for the BoJ minutes as well as data on Japanese retail sales. The U.S. is set to release data on the housing sector, consumer confidence and initial jobless claims.
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USD/CAD
The Canadian dollar was lower against the U.S. dollar on Friday, as concerns over an early conclusion to the Federal Reserve’s asset purchase program bolstered investor demand for safe haven assets. The greenback hit an 11-month high against the Canadian dollar earlier Wednesday. The pair showed little reaction on Friday after official data showed that U.S. durable goods orders rose 3.3% in April, outstripping expectations for a 1.5% increase. Investors will be looking ahead to data on gross domestic product from Canada, as well as a rate decision by the Bank of Canada.
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