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Forex - Weekly outlook: January 31- February 4

Published 01/30/2011, 04:56 AM
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Investing.com – Last Friday saw the U.S. dollar, the Swiss franc and the yen rally against major counterparts, on a wave of risk aversion, as political unrest in Egypt threatened to spread to neighboring Arab countries.

The euro weakened broadly, tumbling 0.88% against the dollar, 1.2% against the Swiss franc and 1.84% against the yen. On Thursday, the yen dropped to a two-month low against the euro after Standard & Poor’s lowered Japan’s credit rating by one notch to AA-.

The dollar was also boosted by a report showing U.S. gross domestic product rose 3.2% in the fourth quarter. The increase was driven by the biggest rise in consumer spending in more than four years.

Meanwhile, the pound was also broadly lower on Friday as data showing an unexpected contraction in fourth quarter GDP and seeming reluctance by Bank of England Governor, Melvyn King to raise interest rates weighed.

Next week, the biggest focus will be the release on Friday of the U.S. government's closely watched monthly non-farm payrolls report. The European Central Bank's interest-rate decision is also likely to be watched closely.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, January 31

The euro zone is to publish preliminary data on consumer price inflation while Germany is to publish official data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity.

Canada is to publish a monthly report on GDP, the broadest measure of economic activity and the primary gauge of the economy's health. The country is also to release data on raw material price inflation.

Also Monday, the U.S. is to publish official data on personal consumption expenditure, an important indicator of consumer inflation. The report also contains data on personal incomes and spending. The country is also to publish the Chicago PMI, a leading indicator of economic health.

Elsewhere, Australia is to publish official data on private sector credit while Japan is to publish a report on housing starts. Later in the day, New Zealand is to publish its quarterly labor cost index, a leading indicator of consumer inflation.

Tuesday, February 1

The Reserve Bank of Australia is to announce its cash rate and release its rate statement, which discusses the economic outlook and offers clues on the outcome of future interest rate decisions. The country is also to publish official data on commodity prices, house prices and business confidence. Elsewhere, Japan is to publish official data on average cash earnings.

The euro zone is to publish official data on its unemployment rate while Germany is to release data on unemployment change. In addition, ECB President, Jean-Claude Trichet is to speak at a public engagement, his comments will be closely watched for any clues to the future possible direction of monetary policy.

Elsewhere in Europe, Switzerland is to publish official data on retail sales, a primary indicator of consumer spending, as well as data on manufacturing.

The U.K. is to release industry data on house prices as well as official data on manufacturing, a leading indicator of economic health. Meanwhile, the Bank of England is to publish data on net lending to individuals, mortgage approvals and M4 money supply, an important inflationary indicator.

In the U.S., the Institute of Supply Management is to publish data on manufacturing growth, a leading indicator of economic health.

Wednesday, February 2

The U.K. is to publish its construction PMI, a leading indicator of economic strength while the euro zone is to publish official data on producer price inflation.

The U.S. is to publish private sector employment data compiled by payroll processing company ADP, which leads the government data by two days. The country is also to publish official data on crude oil stockpiles.

Later in the day, New Zealand is to publish official data on employment change and the unemployment rate, a leading indicator of economic health.

Thursday, February 3

Australia is to publish official data on building approvals, a leading gauge of future construction activity. The country is also to publish data on its trade balance, the difference in value between imports and exports over the month.

Later in the day, Switzerland is also to publish data on its trade balance.

In the euro zone, the ECB is to announce its minimum bid rate. The announcement will be followed by a closely watched press conference to discuss the rate decision. Also Thursday, the euro zone is also to publish official data on retail sales.

Meanwhile, the U.K. is to publish its services PMI, a leading indicator of economic health.

The U.S. is to publish its weekly report on initial jobless claims as well as data on labor costs, productivity and factory orders. In addition, the ISM is to publish its non-manufacturing PMI. Also Thursday, the chairman of the Federal Reserve, Ben Bernanke is to speak at a public engagement, his comments will be closely watched for any clues to the future possible direction of monetary policy.

Friday, February 4


The U.S. is to round up the week with keenly anticipated official data on non-farm payrolls, a leading indicator of job creation. The country is also to publish government data on the rate of unemployment and average hourly earnings.

Canada is also to publish monthly employment data as well as the Ivey PMI, a leading indicator of economic health.

Finally, the RBA is to publish its monetary policy statement which gives investors valuable insights into the bank's view of economic conditions and inflation.

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