Forex - Weekly outlook: February 2 - 6

Investing.com - The U.S. dollar was mostly lower against its major counterparts on Friday, as investors reacted to data showing the U.S. economy grew less than expected in the fourth quarter.

The Commerce Department said in a report that the economy expanded 2.6% in the final three months of 2014, below expectations for a 3.0% gain and slowing sharply from growth of 5.0% in the three months to September.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, ended the week at 95.00, down 0.01% for the day and 0.33% lower on the week.

The dollar slid lower against the safe haven yen, with USD/JPY down 0.69% to 117.50 in late trade, amid weakness in U.S. equities following the lackluster GDP data.

The Dow Jones fell 251.90 points, or 1.45%, while the S&P 500 declined 26.26 points, or 1.3%.

Meanwhile, the euro was under pressure after data showed that deflation in the single currency bloc deepened in January and amid growing concerns over Greece's future in the euro zone.

Eurostat said that the annual rate of euro zone inflation fell by 0.6% in January, after a 0.2% slip in December. Economists had expected an annual decline of 0.5%.

Greece’s new government said it will not cooperate with the International Monetary Fund and the European Union and will not seek an extension to its bailout program, underlining fears over a clash with its international creditors.

The Canadian dollar was also hard-hit after Statistics Canada said the country's gross domestic product fell 0.2% in November, compared to expectations for a 0.1% downtick and after a 0.3% gain in October.

The Australian dollar weakened to a five-and-a-half year low against the greenback amid growing expectations for an interest rate cut in Australia next week.

Elsewhere, the Swiss franc strengthened against the other major currencies on Friday, amid heightened expectations for further intervention by the Swiss National Bank in the currency market (USD/CHF, EUR/CHF).

Meanwhile, the dollar rallied 1.74% against the Russian rouble to end at 70.05 after Russia's central bank unexpectedly cut its benchmark interest rate to 15.0%, one month after surprising markets by hiking rates to 17.0%.

In the commodities market, oil prices scored their biggest one-day gain since June 2012 amid indication that U.S. producers may be pulling back on new production in response to low prices.

Nymex oil futures surged $3.71, or 8.33%, to $48.24 a barrel, while London-traded Brent prices soared $3.86, or 7.86%, to $52.99.

Gold was also well-supported, with prices tacking on $23.30, or 1.86%, to close at $1,279.20 following the release of weaker than expected U.S. GDP data.

In the week ahead, investors will be turning their attention to Friday’s U.S. nonfarm payrolls report for further indications on the strength of the recovery in the labor market.

Central bank policy meetings in the U.K. and Australia 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, February 2

China is to release a report on the HSBC manufacturing index.

In the euro zone, Spain is to release data on the change in the number of people employed.

The U.K. is to publish its manufacturing index.

In the U.S., the Institute of Supply Management is to release data on manufacturing activity. The country will also produce a report on personal income and spending.

Tuesday, February 3

Australia is to release data on building approvals and the trade balance. Later in the day, the Reserve Bank of Australia is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.

The U.K. is to publish a report on construction sector activity.

The U.S. is to release data on factory orders.

Wednesday, February 4

New Zealand is to release data on the change in the number of people unemployed and the unemployment rate.

Elsewhere, China is to publish its HSBC service sector index.

The euro zone is to publish a report on retail sales.

The U.K. is to publish a report on service sector activity.

The U.S. is to release a report on ADP nonfarm payrolls. Later in the day, the Institute of Supply Management is to release data on non-manufacturing activity.

Canada is to publish its Ivey PMI.

Thursday, February 5

Australia is to publish data on retail sales.

The Bank of England is to announce its monetary policy decision.

The U.S. is to produce its weekly report on initial jobless claims in addition to data on the trade balance.

Canada is also to report on its trade balance.

Friday, February 6

The RBA is to publish its monetary policy statement.

The Swiss National Bank is to publish a report on foreign currency reserves.

The U.K. is to produce a report on the trade balance.

Canada is to report on building permits and the change in the number of people employed and the unemployment rate.

The U.S. is to round up the week with the closely watched nonfarm payrolls report, and data on wage growth.