Investing.com – The euro surged to a 15-month high against the U.S. dollar on Friday as expectations of higher rates bolstered the singe currency, even after Portugal became the third euro zone country to request a bailout.
On Thursday, the European Central Bank increased its key interest rate for the first time since July 2008 to 1.25% from 1%.
“We did not decide that it was the first of a series of interest-rate increases,” ECB President Jean-Claude Trichet said, following the rate decision. “We will continue to do in the future” what is appropriate “to ensure price stability,” he said.
Meanwhile, the dollar was pressured as the White House and Congress attempted to break a U.S. budget deadlock in order to avoid a government shutdown.
The ECB’s decision to raise its benchmark rate came as the central banks of other developed nations, including the U.S. and Japan, were expected to keep rates close to record lows to support their economies as they recover from the financial crisis.
The Federal Reserve is not expected to raise its federal funds rate until the first quarter of 2012 and the Bank of Japan will probably keep borrowing costs on hold for the next 12 months.
Elsewhere on Friday, the pound rallied to a 15-month high against the greenback after official data showing that U.K. producer output prices unexpectedly rose in March rekindled expectations for a near-term rate hike by the Bank of England.
Also last week, the Australian dollar climbed its highest level against the greenback since it was floated in December 1983. The Aussie has benefited from strong domestic economic growth, fueled in large part by exports of raw materials to China.
In the week ahead, investors will be looking towards March U.S. retail sales data to gauge the strength of consumer spending, as well as government data on consumer and producer price inflation.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, April 11
Japan is to begin the week with government data on machinery orders, a leading indicator of production. In the euro zone, France and Italy are to publish official data on industrial production.
In the U.S., the Federal Reserve Bank of Chicago President Charles Evans is to speak; his comments will be closely watched for any clues to the future possible direction of monetary policy. Also Monday, Federal Reserve Governor Janet Yellen is to speak.
Tuesday, April 12
The U.K. is to publish official data on consumer price inflation, which is considered the country’s most important inflation data because it's used as the central bank's inflation target. The country is also to publish official data on the retail price index and the trade balance, the difference in value between imported and exported goods and services. In addition, the U.K. is to publish industry data on retail sales and house prices.
In the euro zone, the ZEW Centre for Economic Research is to publish a report on German economic sentiment, a leading indicator of economic health.
Later in the day, the Bank of Canada is to announce its overnight rate. The announcement is to be followed by the bank’s rate statement, which contains commentary on the economic conditions that influenced the interest rate decision. Canada is also to publish government data on its trade balance and new home prices.
The U.S. is also to release government data on its trade balance, as well as a report on import prices, an important indicator of inflation. The U.S. is also to publish monthly data on the federal budget balance.
Also Tuesday, the Bank of Japan is to publish the minutes of its most recent monetary policy meeting, while Australia is to publish a report on business confidence compiled by the National Australia Bank.
Wednesday, April 13
Switzerland is to release government data on producer price inflation, a leading indicator of consumer inflation, while the euro zone is to publish official data on industrial production.
The U.K. is to publish official data on claimant count change and average earnings as well as the overall unemployment rate, a leading indicator of economic health.
Later in the day, the U.S. is to publish government data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity. The country is also to publish official data on business inventories and crude oil stockpiles while the Federal Reserve is to publish its Beige Book.
The Bank of Canada is to publish its monetary policy report, which provides valuable insights into the bank's view of economic conditions and inflation. The bank will also hold a press conference to discuss the report.
Also Wednesday, Australia is to publish a report on consumer sentiment complied by Westpac, while the Governor of the Reserve Bank of Australia, Glenn Stevens, is to speak.
Thursday, April 14
Australia is to publish a report on inflation expectations, as well as official data on new vehicle sales, a leading indicator of economic confidence.
In the euro zone, the ECB is to publish its monthly bulletin, which provides detailed analysis of current and future economic conditions from the bank's viewpoint. Elsewhere, the ZEW Centre for Economic Research is to publish a report on Swiss economic expectations.
The U.S. is to publish official data on producer price inflation, a leading indicator of consumer inflation. The country is also to publish its weekly report on initial jobless claims, an important signal of overall economic health.
Also Thursday, Canada is to release official data on manufacturing sales, a leading indicator of economic health, as well as a report on new vehicle sales.
Friday, April 15
The euro zone is to publish official data on consumer price inflation, which accounts for a majority of overall inflation.
The U.S. is also to publish official data on consumer price inflation. In addition, the U.S. is to publish official data on industrial production and the capacity utilization rate, while the Federal Reserve Bank of New York is to publish its manufacturing index. The U.S. is also to publish a report on the balance of domestic and foreign investment, while the University of Michigan is to publish preliminary data on consumer sentiment and inflation expectations.
On Thursday, the European Central Bank increased its key interest rate for the first time since July 2008 to 1.25% from 1%.
“We did not decide that it was the first of a series of interest-rate increases,” ECB President Jean-Claude Trichet said, following the rate decision. “We will continue to do in the future” what is appropriate “to ensure price stability,” he said.
Meanwhile, the dollar was pressured as the White House and Congress attempted to break a U.S. budget deadlock in order to avoid a government shutdown.
The ECB’s decision to raise its benchmark rate came as the central banks of other developed nations, including the U.S. and Japan, were expected to keep rates close to record lows to support their economies as they recover from the financial crisis.
The Federal Reserve is not expected to raise its federal funds rate until the first quarter of 2012 and the Bank of Japan will probably keep borrowing costs on hold for the next 12 months.
Elsewhere on Friday, the pound rallied to a 15-month high against the greenback after official data showing that U.K. producer output prices unexpectedly rose in March rekindled expectations for a near-term rate hike by the Bank of England.
Also last week, the Australian dollar climbed its highest level against the greenback since it was floated in December 1983. The Aussie has benefited from strong domestic economic growth, fueled in large part by exports of raw materials to China.
In the week ahead, investors will be looking towards March U.S. retail sales data to gauge the strength of consumer spending, as well as government data on consumer and producer price inflation.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, April 11
Japan is to begin the week with government data on machinery orders, a leading indicator of production. In the euro zone, France and Italy are to publish official data on industrial production.
In the U.S., the Federal Reserve Bank of Chicago President Charles Evans is to speak; his comments will be closely watched for any clues to the future possible direction of monetary policy. Also Monday, Federal Reserve Governor Janet Yellen is to speak.
Tuesday, April 12
The U.K. is to publish official data on consumer price inflation, which is considered the country’s most important inflation data because it's used as the central bank's inflation target. The country is also to publish official data on the retail price index and the trade balance, the difference in value between imported and exported goods and services. In addition, the U.K. is to publish industry data on retail sales and house prices.
In the euro zone, the ZEW Centre for Economic Research is to publish a report on German economic sentiment, a leading indicator of economic health.
Later in the day, the Bank of Canada is to announce its overnight rate. The announcement is to be followed by the bank’s rate statement, which contains commentary on the economic conditions that influenced the interest rate decision. Canada is also to publish government data on its trade balance and new home prices.
The U.S. is also to release government data on its trade balance, as well as a report on import prices, an important indicator of inflation. The U.S. is also to publish monthly data on the federal budget balance.
Also Tuesday, the Bank of Japan is to publish the minutes of its most recent monetary policy meeting, while Australia is to publish a report on business confidence compiled by the National Australia Bank.
Wednesday, April 13
Switzerland is to release government data on producer price inflation, a leading indicator of consumer inflation, while the euro zone is to publish official data on industrial production.
The U.K. is to publish official data on claimant count change and average earnings as well as the overall unemployment rate, a leading indicator of economic health.
Later in the day, the U.S. is to publish government data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity. The country is also to publish official data on business inventories and crude oil stockpiles while the Federal Reserve is to publish its Beige Book.
The Bank of Canada is to publish its monetary policy report, which provides valuable insights into the bank's view of economic conditions and inflation. The bank will also hold a press conference to discuss the report.
Also Wednesday, Australia is to publish a report on consumer sentiment complied by Westpac, while the Governor of the Reserve Bank of Australia, Glenn Stevens, is to speak.
Thursday, April 14
Australia is to publish a report on inflation expectations, as well as official data on new vehicle sales, a leading indicator of economic confidence.
In the euro zone, the ECB is to publish its monthly bulletin, which provides detailed analysis of current and future economic conditions from the bank's viewpoint. Elsewhere, the ZEW Centre for Economic Research is to publish a report on Swiss economic expectations.
The U.S. is to publish official data on producer price inflation, a leading indicator of consumer inflation. The country is also to publish its weekly report on initial jobless claims, an important signal of overall economic health.
Also Thursday, Canada is to release official data on manufacturing sales, a leading indicator of economic health, as well as a report on new vehicle sales.
Friday, April 15
The euro zone is to publish official data on consumer price inflation, which accounts for a majority of overall inflation.
The U.S. is also to publish official data on consumer price inflation. In addition, the U.S. is to publish official data on industrial production and the capacity utilization rate, while the Federal Reserve Bank of New York is to publish its manufacturing index. The U.S. is also to publish a report on the balance of domestic and foreign investment, while the University of Michigan is to publish preliminary data on consumer sentiment and inflation expectations.