Investing.com - The U.S. dollar weakened broadly on Friday, as the release of soft U.S. inflation data halted a rally which had pushed the greenback to an 11-month high against the yen and a one-month high against the euro earlier in the week.
The Department of Labor said consumer price inflation rose 0.4% in February, in line with expectations, fueled largely by pricier gasoline. Core inflation rates, which are stripped of volatile food and energy prices, rose 0.1%, below expectations for a gain of 0.2%.
Sentiment on the greenback was further hit after industrial production numbers came in flat in February, below expectations for a 0.4% gain, while the University of Michigan’s consumer confidence index also disappointed, coming in at 74.3, below expectations for a reading of 75.7.
The greenback had rallied against its major counterparts earlier in the week, as investors trimmed back expectations for another round of quantitative easing from the Federal Reserve after the central bank upgraded its outlook on the economy and acknowledged the recent improvement in the labor market.
However, policymakers reiterated their intention to keep the benchmark interest rate unchanged at a record low through late 2014 and warned that risks to the economic recovery still remained.
Despite Friday’s data the greenback remained supported against the yen, which has been under pressure since last month’s surprise decision by the Bank of Japan to ease monetary policy and set a targeted inflation rate. Japan’s increasing trade deficit has also threatened the yen’s traditional safe haven status.
Earlier in the week, the BoJ held off announcing any fresh easing measures following its policy meeting, but enlarged a loan fund for businesses in “high-growth” sectors, indicating that the central bank has not moved away from an easing policy.
The dollar ended the week lower against the Swiss franc, after falling sharply on Friday, extending the previous session’s steep losses.
On Thursday, the Swiss National Bank left its minimum exchange rate floor of 1.20 per euro unchanged and reiterated its pledge to defend the level with the “upmost determination”. The exchange rate cap was introduced last September as the appreciation of the Swiss franc undermined exports and increased the risk of deflation.
In the week ahead, the U.S. is to release a flurry of data on the housing sector, which investors will be watching closely to gauge the strength of the economic recovery. Elsewhere, the euro zone is to publish preliminary data on manufacturing and service sector growth, while the U.K. is to publish official data on retail sales.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, March 19
New Zealand is to publish a report on consumer sentiment, a leading indicator of consumer spending. Elsewhere, the Governor of the Reserve Bank of Australia Glenn Stevens is to speak; his comments will be closely watched for possible indications on the future direction of monetary policy.
The U.K. is to publish industry data on house price inflation, a leading indicator of the health of the housing sector.
The euro zone is to release a report on the current account, while later in the day Canada is to publish official data on wholesale sales, a leading indicator of consumer spending.
Tuesday, March 20
The RBA is to publish the minutes of its March monetary policy meeting, which give investors a detailed insight into current economic conditions from the bank’s perspective. Australia is also to publish an index of leading economic indicators, designed to predict the future direction of the economy. In Japan, markets are to remain closed for a public holiday.
In the euro zone, Germany is to publish official data on producer price inflation, a leading indicator of consumer inflation. Meanwhile, Switzerland is to produce government data on industrial production, a leading indicator of economic health.
The U.K. is to release official data on consumer price inflation, which accounts for a majority of overall inflation. In addition, the U.K. is to release industry data on industrial order expectations, a leading indicator of economic health.
The U.S. is to produce official data on building permits, an excellent gauge of future construction activity, as well as data on housing starts, a leading indicator of economic health. Also Tuesday, Fed Chairman Ben Bernanke is to speak at an event in Washington; his comments will be closely watched for possible indications on the future direction of monetary policy.
Later in the day, New Zealand is to publish official data on the current account and visitor arrivals.
Wednesday, March 21
Australia is to publish an index of leading economic indicators, designed to predict the future direction of the economy. New Zealand is to produce government data on gross domestic product, the broadest measure of economic activity and the foremost indicator of the economy's health.
In the U.K., the Bank of England is to publish the minutes of its March monetary policy meeting, which give investors a detailed insight into current economic conditions from the bank’s perspective. The U.K. is also to publish official data on public sector borrowing, while the government’s annual budget document is to be presented in parliament.
Canada is to release data on an index of leading economic indicators, designed to predict the future direction of the economy.
Also Wednesday, the U.S. is to release industry data on existing home sales, a leading indicator of economic health, as well as official data on crude oil stockpiles.
Thursday, March 22
Japan is to publish official data on the trade balance, the difference in value between imports and exports over the month.
The euro zone is to release preliminary data on manufacturing and service sector activity, leading indicators of economic health, while Germany and France are to publish separate, individual reports.
The euro zone is also to publish official data on industrial production, an important indicator of economic health. Later in the day, ECB President Mario Draghi is to speak; his comments will be closely watched for possible indications on the future direction of monetary policy.
Elsewhere in Europe, Switzerland is to release government data on the trade balance. The U.K. is to produce official data on retail sales, the leading indicator of consumer spending, which accounts for the majority of overall economic activity.
Later in the day, Canada is also to release government data on retail sales, while the U.S. is to publish official data on initial jobless claims, a leading indicator of economic health. Also Thursday, Fed Chairman Ben Bernanke is to speak at an event in Washington; his comments will be closely watched for possible indications on the future direction of monetary policy.
Friday, March 23
The U.K. is to publish a report on consumer confidence, a leading indicator of consumer spending, as well as industry data on mortgage approvals, an important indicator of housing market demand.
Later in the day, Canada is to produce government data on consumer price inflation, which accounts for the majority of overall inflation. The U.S. is to round up the week with official data on new home sales, a leading indicator of economic health.
The Department of Labor said consumer price inflation rose 0.4% in February, in line with expectations, fueled largely by pricier gasoline. Core inflation rates, which are stripped of volatile food and energy prices, rose 0.1%, below expectations for a gain of 0.2%.
Sentiment on the greenback was further hit after industrial production numbers came in flat in February, below expectations for a 0.4% gain, while the University of Michigan’s consumer confidence index also disappointed, coming in at 74.3, below expectations for a reading of 75.7.
The greenback had rallied against its major counterparts earlier in the week, as investors trimmed back expectations for another round of quantitative easing from the Federal Reserve after the central bank upgraded its outlook on the economy and acknowledged the recent improvement in the labor market.
However, policymakers reiterated their intention to keep the benchmark interest rate unchanged at a record low through late 2014 and warned that risks to the economic recovery still remained.
Despite Friday’s data the greenback remained supported against the yen, which has been under pressure since last month’s surprise decision by the Bank of Japan to ease monetary policy and set a targeted inflation rate. Japan’s increasing trade deficit has also threatened the yen’s traditional safe haven status.
Earlier in the week, the BoJ held off announcing any fresh easing measures following its policy meeting, but enlarged a loan fund for businesses in “high-growth” sectors, indicating that the central bank has not moved away from an easing policy.
The dollar ended the week lower against the Swiss franc, after falling sharply on Friday, extending the previous session’s steep losses.
On Thursday, the Swiss National Bank left its minimum exchange rate floor of 1.20 per euro unchanged and reiterated its pledge to defend the level with the “upmost determination”. The exchange rate cap was introduced last September as the appreciation of the Swiss franc undermined exports and increased the risk of deflation.
In the week ahead, the U.S. is to release a flurry of data on the housing sector, which investors will be watching closely to gauge the strength of the economic recovery. Elsewhere, the euro zone is to publish preliminary data on manufacturing and service sector growth, while the U.K. is to publish official data on retail sales.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, March 19
New Zealand is to publish a report on consumer sentiment, a leading indicator of consumer spending. Elsewhere, the Governor of the Reserve Bank of Australia Glenn Stevens is to speak; his comments will be closely watched for possible indications on the future direction of monetary policy.
The U.K. is to publish industry data on house price inflation, a leading indicator of the health of the housing sector.
The euro zone is to release a report on the current account, while later in the day Canada is to publish official data on wholesale sales, a leading indicator of consumer spending.
Tuesday, March 20
The RBA is to publish the minutes of its March monetary policy meeting, which give investors a detailed insight into current economic conditions from the bank’s perspective. Australia is also to publish an index of leading economic indicators, designed to predict the future direction of the economy. In Japan, markets are to remain closed for a public holiday.
In the euro zone, Germany is to publish official data on producer price inflation, a leading indicator of consumer inflation. Meanwhile, Switzerland is to produce government data on industrial production, a leading indicator of economic health.
The U.K. is to release official data on consumer price inflation, which accounts for a majority of overall inflation. In addition, the U.K. is to release industry data on industrial order expectations, a leading indicator of economic health.
The U.S. is to produce official data on building permits, an excellent gauge of future construction activity, as well as data on housing starts, a leading indicator of economic health. Also Tuesday, Fed Chairman Ben Bernanke is to speak at an event in Washington; his comments will be closely watched for possible indications on the future direction of monetary policy.
Later in the day, New Zealand is to publish official data on the current account and visitor arrivals.
Wednesday, March 21
Australia is to publish an index of leading economic indicators, designed to predict the future direction of the economy. New Zealand is to produce government data on gross domestic product, the broadest measure of economic activity and the foremost indicator of the economy's health.
In the U.K., the Bank of England is to publish the minutes of its March monetary policy meeting, which give investors a detailed insight into current economic conditions from the bank’s perspective. The U.K. is also to publish official data on public sector borrowing, while the government’s annual budget document is to be presented in parliament.
Canada is to release data on an index of leading economic indicators, designed to predict the future direction of the economy.
Also Wednesday, the U.S. is to release industry data on existing home sales, a leading indicator of economic health, as well as official data on crude oil stockpiles.
Thursday, March 22
Japan is to publish official data on the trade balance, the difference in value between imports and exports over the month.
The euro zone is to release preliminary data on manufacturing and service sector activity, leading indicators of economic health, while Germany and France are to publish separate, individual reports.
The euro zone is also to publish official data on industrial production, an important indicator of economic health. Later in the day, ECB President Mario Draghi is to speak; his comments will be closely watched for possible indications on the future direction of monetary policy.
Elsewhere in Europe, Switzerland is to release government data on the trade balance. The U.K. is to produce official data on retail sales, the leading indicator of consumer spending, which accounts for the majority of overall economic activity.
Later in the day, Canada is also to release government data on retail sales, while the U.S. is to publish official data on initial jobless claims, a leading indicator of economic health. Also Thursday, Fed Chairman Ben Bernanke is to speak at an event in Washington; his comments will be closely watched for possible indications on the future direction of monetary policy.
Friday, March 23
The U.K. is to publish a report on consumer confidence, a leading indicator of consumer spending, as well as industry data on mortgage approvals, an important indicator of housing market demand.
Later in the day, Canada is to produce government data on consumer price inflation, which accounts for the majority of overall inflation. The U.S. is to round up the week with official data on new home sales, a leading indicator of economic health.