Investing.com - The euro moved higher against the dollar on Friday after data showed that the U.S. economy contracted in the first quarter, but continued expectations for a rate hike later this year continued to underpin dollar demand.
The Commerce Department said U.S. gross domestic product contracted at an annual rate of 0.7% in the first three months of the year, instead of the initial estimate of 0.2% growth. However, it was still better than economists’ forecast of a 1% contraction.
EUR/USD was up 0.37% to 1.0988 in late trade, but the single currency ended the month down 1.89% against the broadly stronger greenback.
The single currency remained under pressure as Athens continued long-running negotiations with its lenders on a cash-for-reforms deal ahead of a €305 million payment to the International Monetary Fund due on June 5.
The Greek government expressed confidence on Friday that a deal with creditors is close.
However, the country’s creditors have played down optimism over an agreement. IMF head Christine Lagarde warned Friday that a deal was very unlikely to come soon, while the European Commission said that more work must be done.
The dollar strengthened broadly in May as stronger U.S. economic data prompted investors to bring forward expectations on the timing of an initial rate hike by the Federal Reserve.
Upbeat reports on inflation, new home sales, business investment and consumer confidence during the month all indicated that the economy is gaining momentum after a weak first quarter.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, eased to 96.94, holding below Wednesday’s five week peaks of 97.88. The index ended the week up 0.92%, bringing the month’s gains to 2.35%.
In the week ahead, Friday’s U.S. employment report will be closely watched for signs of improvement in the labor market. Tuesday’s preliminary data on euro area consumer prices and Wednesday’s European Central Bank monetary policy announcement will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, June 1
Germany is to release preliminary data on consumer prices. The euro zone is to release final data on manufacturing sector growth.
Later in the day, the Institute of Supply Management is to release data on U.S. manufacturing activity.
Tuesday, June 2
The euro zone is to release preliminary data on consumer prices, while Spain and Germany are to publish the latest employment reports.
The U.S. is to report on factory orders.
Wednesday, June 3
The euro zone is to release final data on service sector growth, as well as data on retail sales and the unemployment rate.
The ECB is also to announce its monetary policy decision. The rate announcement will be followed by a post-policy meeting press conference with President Mario Draghi.
The U.S. is to release the ADP non-farm payrolls report, while looks at private sector jobs growth.
The U.S. is also to release the monthly trade report and later in the day the ISM is to report on service sector activity.
Thursday, June 4
The U.S. is to release the weekly report on initial jobless claims.
Friday, June 5
In the euro area, Germany is to release data on factory orders.
The U.S. is to round up the week with the closely watched government report on nonfarm payrolls, the unemployment rate and average earnings.