Investing.com - Last week saw the euro weaken against most of its major counterparts, tumbling to 16-month lows against the U.S. dollar and the pound and a more than decade low against the yen amid fears that the financial crisis in the euro zone is worsening.
Concerns over the sovereign funding needs of troubled euro zone states, as well as signs of weakness in the region’s banking sector overshadowed Friday’s better-than-expected U.S. jobs data and saw investors shun riskier assets in favor of the dollar.
The U.S. Department of Labor said nonfarm payrolls increased by 200,000 in December from a downwardly revised 100,000 the previous month and surpassing expectations for a 150,000 increase. The unemployment rate unexpectedly fell to 8.5%, the lowest level since February 2009.
The strong data underlined the divergence between the embattled euro zone and the more buoyant U.S. economy.
Earlier in the week, the euro came under pressure after France sold EUR4.02 billion of 10-year bonds in an auction which met with solid demand but at higher yields.
France is seen as vulnerable to losing its triple-A credit rating in the coming weeks, after it was put on negative watch by ratings agencies Standard & Poor’s and Fitch’s in December, amid concerns over the handling of the financial crisis in the euro zone.
The French auction came one day after an auction of German 10-year government debt which encountered lower than average investor demand.
Meanwhile, fears over the strength of the euro zone’s banking sector intensified after a report on Thursday showed that overnight deposits at the European Central Bank reached a new record high of EUR455 billion, indicating that European banks remain unwilling to lend to each other.
Elsewhere, Italian 10-year bond yields remained close to the critical 7% threshold, seen as unsustainable in the long term, despite ongoing bond purchases by the ECB.
In the week ahead, investors will be closely watching a meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel on Monday for any signs of progress in resolving the region’s two-year old debt crisis.
France, Greece, Germany, Italy and Spain are all scheduled to hold auctions of government debt, while the ECB is to hold its first policy-setting meeting of the New Year.
Also next week, the U.S. is to publish official data on retail sales and consumer sentiment.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 9
New Zealand is to produce official data on the trade balance, the difference in value between imported and exported goods. Australia is to release industry data on new home sales, a leading indicator of economic health, followed by an official report on retail sales, the primary gauge of consumer spending. Markets in Japan will be closed for a national holiday.
In the euro zone, a report is to be released on investor confidence in the single currency bloc, as well as data on German industrial production, a leading indicator of economic health. Switzerland is to publish official data on retail sales.
Later in the day, Canada is to produce official data on building permits, an excellent gauge of future construction activity. The Bank of Canada is also to release its quarterly business outlook survey, a leading indicator of economic health.
Also Monday, Federal Open Market Committee member Dennis Lockhart is to speak.
Tuesday, January 10
New Zealand is to publish an official report on building consents, while Australia is to release data on building approvals, a key indicator of future construction activity.
In the U.K., the British Retail Consortium is to release a report on retail sales. The U.K. is also to produce industry data on house price balance, a key gauge of housing inflation.
The euro zone is to publish an official report on French industrial production, a leading indicator of economic health.
Elsewhere, Canada is to release data on housing starts, an excellent indicator of economic health, while in the U.S., FOMC members John Williams and Sandra Pianalto are to speak.
Wednesday, January 11
The U.K. is to release official data on the trade balance, while the euro zone is to publish revised data on third quarter gross domestic product.
Later in the day, the U.S. is to produce official data on crude oil stockpiles, while the Federal Reserve is to release its Beige Book. In addition, FOMC member Dennis Lockhart is to speak.
Thursday, January 12
New Zealand is to publish industry data on house price inflation, a leading indicator of the housing industry’s health.
The U.K. is to release an official report on manufacturing production, a key indicator of economic health, while the National Institute of Economic and Social Research is to publish its monthly estimate of GDP. Later in the day, the Bank of England is to announce its benchmark interest rate
In the euro zone, the ECB is to announce its benchmark interest rate. The announcement will be followed by a closely watched press conference, as investors remain focused on the region's financial crisis.
Canada is to produce official data on new house price inflation, a leading indicator of demand in the housing sector.
Later Thursday, the U.S. is to release official data on retail sales and initial jobless claims. The country is also to publish government data on business inventories, a signal of future business spending, followed by a report on the federal budget balance.
Friday, January 13
The U.K. is to release official data on producer price inflation input, a leading indicator of consumer inflation.
Meanwhile, Canada is to produce an official report on the trade balance.
The U.S. is to round up the week with data on the trade balance, as well as government data on import prices. In addition, the University of Michigan is to release preliminary data on inflation expectations and consumer sentiment, a leading indicator of consumer spending.
Concerns over the sovereign funding needs of troubled euro zone states, as well as signs of weakness in the region’s banking sector overshadowed Friday’s better-than-expected U.S. jobs data and saw investors shun riskier assets in favor of the dollar.
The U.S. Department of Labor said nonfarm payrolls increased by 200,000 in December from a downwardly revised 100,000 the previous month and surpassing expectations for a 150,000 increase. The unemployment rate unexpectedly fell to 8.5%, the lowest level since February 2009.
The strong data underlined the divergence between the embattled euro zone and the more buoyant U.S. economy.
Earlier in the week, the euro came under pressure after France sold EUR4.02 billion of 10-year bonds in an auction which met with solid demand but at higher yields.
France is seen as vulnerable to losing its triple-A credit rating in the coming weeks, after it was put on negative watch by ratings agencies Standard & Poor’s and Fitch’s in December, amid concerns over the handling of the financial crisis in the euro zone.
The French auction came one day after an auction of German 10-year government debt which encountered lower than average investor demand.
Meanwhile, fears over the strength of the euro zone’s banking sector intensified after a report on Thursday showed that overnight deposits at the European Central Bank reached a new record high of EUR455 billion, indicating that European banks remain unwilling to lend to each other.
Elsewhere, Italian 10-year bond yields remained close to the critical 7% threshold, seen as unsustainable in the long term, despite ongoing bond purchases by the ECB.
In the week ahead, investors will be closely watching a meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel on Monday for any signs of progress in resolving the region’s two-year old debt crisis.
France, Greece, Germany, Italy and Spain are all scheduled to hold auctions of government debt, while the ECB is to hold its first policy-setting meeting of the New Year.
Also next week, the U.S. is to publish official data on retail sales and consumer sentiment.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 9
New Zealand is to produce official data on the trade balance, the difference in value between imported and exported goods. Australia is to release industry data on new home sales, a leading indicator of economic health, followed by an official report on retail sales, the primary gauge of consumer spending. Markets in Japan will be closed for a national holiday.
In the euro zone, a report is to be released on investor confidence in the single currency bloc, as well as data on German industrial production, a leading indicator of economic health. Switzerland is to publish official data on retail sales.
Later in the day, Canada is to produce official data on building permits, an excellent gauge of future construction activity. The Bank of Canada is also to release its quarterly business outlook survey, a leading indicator of economic health.
Also Monday, Federal Open Market Committee member Dennis Lockhart is to speak.
Tuesday, January 10
New Zealand is to publish an official report on building consents, while Australia is to release data on building approvals, a key indicator of future construction activity.
In the U.K., the British Retail Consortium is to release a report on retail sales. The U.K. is also to produce industry data on house price balance, a key gauge of housing inflation.
The euro zone is to publish an official report on French industrial production, a leading indicator of economic health.
Elsewhere, Canada is to release data on housing starts, an excellent indicator of economic health, while in the U.S., FOMC members John Williams and Sandra Pianalto are to speak.
Wednesday, January 11
The U.K. is to release official data on the trade balance, while the euro zone is to publish revised data on third quarter gross domestic product.
Later in the day, the U.S. is to produce official data on crude oil stockpiles, while the Federal Reserve is to release its Beige Book. In addition, FOMC member Dennis Lockhart is to speak.
Thursday, January 12
New Zealand is to publish industry data on house price inflation, a leading indicator of the housing industry’s health.
The U.K. is to release an official report on manufacturing production, a key indicator of economic health, while the National Institute of Economic and Social Research is to publish its monthly estimate of GDP. Later in the day, the Bank of England is to announce its benchmark interest rate
In the euro zone, the ECB is to announce its benchmark interest rate. The announcement will be followed by a closely watched press conference, as investors remain focused on the region's financial crisis.
Canada is to produce official data on new house price inflation, a leading indicator of demand in the housing sector.
Later Thursday, the U.S. is to release official data on retail sales and initial jobless claims. The country is also to publish government data on business inventories, a signal of future business spending, followed by a report on the federal budget balance.
Friday, January 13
The U.K. is to release official data on producer price inflation input, a leading indicator of consumer inflation.
Meanwhile, Canada is to produce an official report on the trade balance.
The U.S. is to round up the week with data on the trade balance, as well as government data on import prices. In addition, the University of Michigan is to release preliminary data on inflation expectations and consumer sentiment, a leading indicator of consumer spending.