Investing.com - The euro touched five month lows against the dollar and the yen on Friday as the single currency was hit by ongoing concerns over the outlook for the recovery in the euro area, while heightened geopolitical concerns underpinned safe haven demand.
EUR/USD touched lows of 1.3491, the weakest since February 6 before pulling back to 1.3525 late Friday. For the week, the pair was down 0.56%.
The euro came under pressure after the Bank of Italy cut its growth forecast for this year to 0.2% from 0.7% and warned that risks to the economy remained to the downside. The announcement underlined concerns over the faltering economic recovery in the currency bloc.
Earlier in the week European Central Bank President Mario Draghi said that large scale asset purchases are “squarely” within the bank’s mandate. The remarks were the latest indication that the central bank is open to further monetary easing measures to stave off the risk of deflation in the euro area.
Meanwhile, investor demand for safe haven assets was boosted following the shooting down of a Malaysia Airlines jet in eastern Ukraine. Moscow has denied involvement in the crash, which came a day after the U.S. announced a fresh round of sanctions against Russia for supporting separatists in east Ukraine. Markets were also unsettled as Israel expanded its ground offensive in Gaza.
EUR/JPY hit lows of 136.72, the lowest since February 5 and was last at 137.07. The pair lost 0.59% for the week.
Elsewhere Friday, USD/JPY touched one-week lows of 101.05, before recovering to 101.32 at the close, ending the week little changed.
USD/CHF hit five-week highs of 0.9004 before retracing some of those gains to settle at 0.8981. The pound was also slightly lower against the dollar, with GBP/USD off 0.08% to 1.7086 at the close.
Demand for the dollar continued to be underpinned after Federal Reserve Chair Janet Yellen indicated earlier in the week that interest rates may rise sooner if the economy continues to improve.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was at 80.60 late Friday, after rising to one-month highs of 80.75 earlier in the session.
In the week ahead, the U.S. is to release what will be closely watched data on consumer prices, home sales and manufacturing orders. Investors will also be awaiting surveys on private sector activity in the euro zone, data on second quarter growth from the U.K. and a rate statement by New Zealand’s central bank.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, July 21
Markets in Japan are to remain closed for a national holiday.
In the euro zone, Germany’s Bundesbank is to publish its monthly report.
Tuesday, July 22
Reserve Bank of Australia Governor Glenn Stevens is to speak, his comments will be closely watched.
Switzerland is to release data on the trade balance, the difference in value between imports and exports.
The U.K. is to release data on public sector net borrowing.
The U.S. is to release reports on consumer price inflation and existing home sales.
Wednesday, July 23
Australia is to produce data on consumer price inflation.
The Bank of England is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective. Later in the day, BoE Governor Mark Carney is to speak.
Canada is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
Thursday, July 24
The Reserve Bank of New Zealand 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 bank is also to hold a press conference to discuss the monetary policy decision.
Both New Zealand and Japan are to release reports on their respective trade balances.
China is to release the preliminary reading of the HSBC manufacturing index.
The euro zone is to publish preliminary data on private sector activity, while Germany and France are to also to publish data on private sector growth. Meanwhile, Spain is to release its latest employment report.
The U.K. is to release data on retail sales.
The U.S. is to produce data on unemployment claims, manufacturing activity and new home sales.
Friday, July 25
Japan is to release data on consumer inflation.
New Zealand is to release private sector data on business confidence.
In the euro zone, Germany is to publish the Gfk report on consumer climate and the Ifo report on business climate.
The U.K. is to release preliminary data on second quarter gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.
The U.S. is to round up the week with data on durable goods orders.