Investing.com - The euro ended the week close to a three-and-a-half month low against the U.S. dollar on Friday, weighed by concerns that ongoing political turmoil in Greece could result in the county’s eventual exit from the euro zone.
The single currency came under heavy selling pressure amid growing expectations that a fresh round of elections in Greece is inevitable, after attempts to form a coalition government failed.
On Friday, Alexis Tsipras the head of Greece’s largest anti-bailout party Syriza rejected a coalition with Socialists and Conservatives, fuelling concerns over the country’s ability to abide by the terms of its EUR130 billion bailout agreement.
Rating agency Fitch warned Friday that it would place the ratings of all euro zone members on review pending possible downgrades, if Greece was to exit the euro zone as a result of its current crisis.
Meanwhile, speculation over the health of Spain’s troubled banking system and the government’s ability to cut one of the largest deficits in the euro area also weighed on market sentiment.
The euro was also weaker against the yen and the pound, with EUR/JPY settling at 103.22 on Friday, down 0.63% on the week, while EUR/GBP settled at 0.8034, having lost 0.32% over the week.
The pound touched a three-and-a-half year high against the euro on Thursday, after the Bank of England kept its benchmark interest rate on hold at 0.5% and announced no change to the size of its asset purchase program.
In the U.S., data on Friday showed that consumer confidence hit a more than four-year high in May, while a separate report showed that producer price inflation fell unexpectedly in April.
Elsewhere, the Australian dollar fell to its lowest level since December against the greenback after Prime Minister Julia Gillard said Wednesday that the government will cut spending in order to give the central bank more flexibility in setting interest rates.
Earlier this month, the Reserve Bank of Australia surprised markets with a larger-than-expected rate cut to 3.75%.
In the week ahead, investors will be watching developments in Greece as well as the first talks between the new French President Francois Hollande and German Chancellor Angela Merkel, amid fears that Hollande’s focus on growth rather than austerity measures as a means to tackle the euro zone crisis could spark tensions with Germany.
In addition, the U.S. is to produce government data on retail sales and inflation, while the Federal Reserve is to publish the minutes of this month’s policy setting meeting.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, May 14
New Zealand is to produce official data on retail sales, the primary gauge of consumer spending, while Australia is to release official data on home loans, a key indicator of demand in the housing market.
Switzerland is to publish official data on producer price inflation, a leading indicator of consumer inflation. Meanwhile, Swiss National Bank Chairman Thomas Jordan is to speak; his comments will be closely watched.
The euro zone is to release official data on industrial production, a key gauge of economic health, while Italy is to hold an auction of 10-year government bonds.
Later Monday, the U.S. is to produce a report on mortgage delinquencies, an important signal of the housing market’s health.
Tuesday, May 15
The RBA is to release the minutes of its latest policy meeting, while Australia is to publish official data on new motor vehicle sales, an important signal of consumer confidence.
The euro zone is to release a preliminary estimate of first quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy’s health, while France, Germany and Italy are also to release individual, closely watched reports.
Meanwhile, the ZEW Centre for Economic Research is to release a report on German economic sentiment as well as economic sentiment throughout the euro area. European Union finance ministers are also scheduled to hold talks throughout the day.
Later Tuesday, the U.S., is to publish official data on retail sales and consumer price inflation, which accounts for a majority of overall inflation. Reports on manufacturing activity in New York, as well as U.S. net long-term securities transactions and business inventories are also due.
Wednesday, May 16
Japan is to produce government data on core machinery orders, a leading indicator of production, as well as on tertiary industry activity. Australia is to release a report on consumer sentiment, followed by official data on wage price inflation, a leading indicator of consumer inflation.
The U.K. is to publish official data on claimant count change, an important signal of overall economic health, as well as on the unemployment rate. Meanwhile, BoE Governor Mervyn King is due to speak ahead of the release of the bank’s inflation report.
The ZEW Centre for Economic Research is to release a report on Swiss economic expectations, a key indicator of economic health.
In the euro zone, official data is to be produced on consumer price inflation, ahead of a speech by European Central Bank President Mario Draghi.
Later in the day, Canada is to produce official data on manufacturing sales, a key indicator of economic health.
Also Wednesday, the U.S. is to produce official data on building permits and housing starts, followed by reports by the Federal Reserve on the capacity utilization rate and industrial production. Government data is also to be released on crude oil inventories ahead of the minutes of the Fed’s latest policy meeting.
Thursday, May 17
New Zealand is to release official data on producer price inflation input, while Australia is to publish data on inflation expectations. Elsewhere, Japan is to publish preliminary data on first quarter GDP.
Markets in Switzerland, France and Germany will remain closed due to national holidays. Elsewhere in the euro zone, Spain is to hold an auction of 10-year government bonds.
Canada is to publish official data on foreign securities purchases and wholesale sales, a leading indicator of consumer spending.
Meanwhile, the U.S. is to produce government data on unemployment claims, followed by a report on manufacturing activity in the Philadelphia area.
Friday, May 18
In the euro zone, Germany is to publish official data on producer price inflation.
Later in the day, Canada is also to release a government report on consumer price inflation.
Also Friday, members of the Group of Eight nations are to begin talks in Camp David, hosted by U.S. President Barak Obama.
The single currency came under heavy selling pressure amid growing expectations that a fresh round of elections in Greece is inevitable, after attempts to form a coalition government failed.
On Friday, Alexis Tsipras the head of Greece’s largest anti-bailout party Syriza rejected a coalition with Socialists and Conservatives, fuelling concerns over the country’s ability to abide by the terms of its EUR130 billion bailout agreement.
Rating agency Fitch warned Friday that it would place the ratings of all euro zone members on review pending possible downgrades, if Greece was to exit the euro zone as a result of its current crisis.
Meanwhile, speculation over the health of Spain’s troubled banking system and the government’s ability to cut one of the largest deficits in the euro area also weighed on market sentiment.
The euro was also weaker against the yen and the pound, with EUR/JPY settling at 103.22 on Friday, down 0.63% on the week, while EUR/GBP settled at 0.8034, having lost 0.32% over the week.
The pound touched a three-and-a-half year high against the euro on Thursday, after the Bank of England kept its benchmark interest rate on hold at 0.5% and announced no change to the size of its asset purchase program.
In the U.S., data on Friday showed that consumer confidence hit a more than four-year high in May, while a separate report showed that producer price inflation fell unexpectedly in April.
Elsewhere, the Australian dollar fell to its lowest level since December against the greenback after Prime Minister Julia Gillard said Wednesday that the government will cut spending in order to give the central bank more flexibility in setting interest rates.
Earlier this month, the Reserve Bank of Australia surprised markets with a larger-than-expected rate cut to 3.75%.
In the week ahead, investors will be watching developments in Greece as well as the first talks between the new French President Francois Hollande and German Chancellor Angela Merkel, amid fears that Hollande’s focus on growth rather than austerity measures as a means to tackle the euro zone crisis could spark tensions with Germany.
In addition, the U.S. is to produce government data on retail sales and inflation, while the Federal Reserve is to publish the minutes of this month’s policy setting meeting.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, May 14
New Zealand is to produce official data on retail sales, the primary gauge of consumer spending, while Australia is to release official data on home loans, a key indicator of demand in the housing market.
Switzerland is to publish official data on producer price inflation, a leading indicator of consumer inflation. Meanwhile, Swiss National Bank Chairman Thomas Jordan is to speak; his comments will be closely watched.
The euro zone is to release official data on industrial production, a key gauge of economic health, while Italy is to hold an auction of 10-year government bonds.
Later Monday, the U.S. is to produce a report on mortgage delinquencies, an important signal of the housing market’s health.
Tuesday, May 15
The RBA is to release the minutes of its latest policy meeting, while Australia is to publish official data on new motor vehicle sales, an important signal of consumer confidence.
The euro zone is to release a preliminary estimate of first quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy’s health, while France, Germany and Italy are also to release individual, closely watched reports.
Meanwhile, the ZEW Centre for Economic Research is to release a report on German economic sentiment as well as economic sentiment throughout the euro area. European Union finance ministers are also scheduled to hold talks throughout the day.
Later Tuesday, the U.S., is to publish official data on retail sales and consumer price inflation, which accounts for a majority of overall inflation. Reports on manufacturing activity in New York, as well as U.S. net long-term securities transactions and business inventories are also due.
Wednesday, May 16
Japan is to produce government data on core machinery orders, a leading indicator of production, as well as on tertiary industry activity. Australia is to release a report on consumer sentiment, followed by official data on wage price inflation, a leading indicator of consumer inflation.
The U.K. is to publish official data on claimant count change, an important signal of overall economic health, as well as on the unemployment rate. Meanwhile, BoE Governor Mervyn King is due to speak ahead of the release of the bank’s inflation report.
The ZEW Centre for Economic Research is to release a report on Swiss economic expectations, a key indicator of economic health.
In the euro zone, official data is to be produced on consumer price inflation, ahead of a speech by European Central Bank President Mario Draghi.
Later in the day, Canada is to produce official data on manufacturing sales, a key indicator of economic health.
Also Wednesday, the U.S. is to produce official data on building permits and housing starts, followed by reports by the Federal Reserve on the capacity utilization rate and industrial production. Government data is also to be released on crude oil inventories ahead of the minutes of the Fed’s latest policy meeting.
Thursday, May 17
New Zealand is to release official data on producer price inflation input, while Australia is to publish data on inflation expectations. Elsewhere, Japan is to publish preliminary data on first quarter GDP.
Markets in Switzerland, France and Germany will remain closed due to national holidays. Elsewhere in the euro zone, Spain is to hold an auction of 10-year government bonds.
Canada is to publish official data on foreign securities purchases and wholesale sales, a leading indicator of consumer spending.
Meanwhile, the U.S. is to produce government data on unemployment claims, followed by a report on manufacturing activity in the Philadelphia area.
Friday, May 18
In the euro zone, Germany is to publish official data on producer price inflation.
Later in the day, Canada is also to release a government report on consumer price inflation.
Also Friday, members of the Group of Eight nations are to begin talks in Camp David, hosted by U.S. President Barak Obama.