Investing.com - The dollar slipped lower against the euro on Friday after data showed that the U.S. economy contracted in the first quarter, but recent indications of a rebound in growth continued to support expectations for higher interest rates.
The Commerce Department said U.S. gross domestic product contracted ant 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 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 dollar ended the week close to 12-year peaks against the yen, with USD/JPY at 124.15. The pair ended the week up 2.13% and posted monthly gains of 3.32%.
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%.
Elsewhere, the New Zealand dollar turned sharply lower on Friday, with NZD/USD dropping 0.99% to 0.7104, the weakest since August 2010.
The drop in the kiwi came after weaker than expected data on business confidence was seen as boosting the likelihood of a rate cut by the country’s central bank.
In the week ahead, Friday’s U.S. employment report will be closely watched for signs of improvement in the labor market. Central bank meeting in the euro zone, 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, June 1
China is to release official data on manufacturing and service sector growth as well as the final reading of the HSBC manufacturing index.
Australia is to produce data on building approvals.
Germany is to release preliminary data on consumer prices. The euro zone is to release final data on manufacturing sector growth.
The U.K. is to publish data on manufacturing sector activity.
Later in the day, the Institute of Supply Management is to release data on manufacturing activity.
Tuesday, June 2
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.
Australia is also to release data on the current account.
Japan is to release a report on average cash earnings.
The euro zone is to release preliminary data on consumer prices, while Spain and Germany are to publish the latest employment reports.
The U.K. is to publish reports on construction activity and net lending.
The U.S. is to report on factory orders.
Wednesday, June 3
Australia is to release data on first quarter economic growth.
China is to release the final reading of the HSBC service sector index.
The euro zone is to release final data on service sector growth, as well as data on retail sales and the unemployment rate.
The European Central Bank 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.K. is to release data on service sector growth.
The U.S. is to release the ADP non-farm payrolls report, while looks at private sector jobs growth.
Both the U.S. and Canada are to release trade data and later in the day, the ISM is to report on U.S. service sector activity.
Thursday, June 4
Australia is to publish report on retail sales and the trade balance.
The Bank of England is to announce its official bank rate.
The U.S. is to release the weekly report on initial jobless claims.
Canada is to publish its Ivey PMI.
Friday, June 5
In the euro area, Germany is to release data on factory orders.
The Swiss National Bank is to publish data on its foreign currency reserves. This data is closely scrutinized for indications of the size of the bank’s operations in currency markets.
Canada is to release its monthly employment report.
The U.S. is to round up the week with the closely watched government report on nonfarm payrolls, the unemployment rate and average earnings.