Investing.com –The euro trimmed some of the week’s losses against the U.S. dollar on Friday, pulling back from an eight-month low as market sentiment strengthened after world financial leaders pledged to make a “strong” response to challenges facing the global economic recovery.
Financial leaders said the G-20 nations are “committed to a strong and coordinated international response to address the renewed challenges facing the global economy,” after talks in Washington.
Leaders also called on the European Union to take quick action to resolve the financial crisis in the euro zone.
The statement came after warnings from the International Monetary Fund and the U.S. Federal Reserve that the global economic recovery is at risk.
After its policy setting meeting on Wednesday the Fed said there were “significant downside risks” facing the U.S. economy. The central bank unveiled a plan to trade short-term bonds for long-term ones, in an attempt to boost the economy by pushing down long-term interest rates, a move dubbed “Operation Twist.”
Earlier in the week, the IMF cut its growth forecasts for the global economy to 4% for 2011 and 2012 and said the world economy had entered "a dangerous new phase."
Despite repeated assurances from EU officials, investors have remained concerned over the possibility of a debt default by Greece, boosting safe haven demand for the greenback and the yen.
The yen hit a 10-year high against the euro on Thursday and has been trading close to a record high against the dollar, prompting speculation that Japan may mount a fresh intervention to weaken the yen in order to protect its largely export driven economy.
On Friday, a senior Japanese finance ministry official said Japan cannot curb the appreciation of its currency by setting a cap on the yen, as Switzerland has done, as that would effectively mean abandoning monetary policy.
Elsewhere, the euro rose against the Swiss franc last week, amid speculation that the Swiss National Bank may move its targeted exchange rate for the franc to 1.25 from 1.20 per euro. A spokesman for the central bank declined to comment.
Meanwhile, the pound slumped to a one-year low against the dollar after the minutes of the Bank of England’s September meeting indicated that the bank is leaning towards implementing more monetary easing, possibly as early as next month.
In the week ahead, developments in Greece look likely to remain in focus while investors will be closely watching U.S. data on second quarter economic growth in order to gauge the strength of the U.S. economic recovery.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, September 26
New Zealand is to publish official data on its trade balance, the difference in value between imported and exported goods over the month.
In the euro zone, the Ifo Institute for Economic Research is to publish a report on German business sentiment, a leading indicator of economic health.
Later in the day, the U.S. is to produce government data on new home sales, a leading indicator of demand in the housing market.
Tuesday, September 27
In Switzerland, UBS bank is to publish its consumption indicator, an important indicator of economic health. In the euro zone, Germany is to release a report on consumer climate.
Elsewhere, in the U.K., BoE monetary policy committee member Adam Posen is to speak; his comments will be closely watched for clues to the future possible direction of monetary policy. The U.K. is also to publish industry data on retail sales, an important indicator of economic health.
Later in the day, the U.S. is to publish industry data on house prices, as well as a report on consumer confidence, a leading indicator of consumer spending.
Wednesday, September 28
In the euro zone, Germany is to publish preliminary data on consumer price inflation, which accounts for the majority of overall inflation. The BoE is to release the results of its credit conditions survey, an important indicator of consumer confidence.
Later in the day, the U.S. is to produce official data on durable goods orders, a leading indicator of production. The country is also to publish government data on crude oil stockpiles.
Also Wednesday, SNB Vice Chairman Thomas Jordan is to speak; his comments will be closely scrutinized for clues to the future possible direction of monetary policy.
Thursday, September 29
Japan is to publish official data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity. Meanwhile, Bank of Japan Governor Masaaki Shirakawa is to speak; his comments will be closely watched by markets.
In the euro zone, Germany is to publish a government report on employment change, an important indicator of economic health. Elsewhere, the BoE is to produce a report on net lending to individuals, an important indicator of consumer confidence.
Canada is to publish official data on raw material price inflation, a leading indicator of consumer inflation.
Meanwhile, the U.S. is to publish its weekly report on initial jobless claims, as well as industry data on pending home sales. The country is also to publish revised data on second quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy's health. In addition, Fed Chairman Ben Bernanke is to speak; his comments will be closely watched for clues regarding future monetary policy.
Friday, September 30
New Zealand is to publish a government report on building consents, a leading gauge of future construction activity. The country is also to publish a report on business confidence, while Australia is to produce official data on private sector credit.
Japan is to produce a string of data with reports on household spending, inflation, unemployment, housing starts and manufacturing, as well as preliminary data on industrial production.
The U.K. is to release data on consumer confidence, while the euro zone is to publish official data on unemployment as well as preliminary data on consumer price inflation, which accounts for a majority of overall inflation. Meanwhile, Germany is to publish official data on retail sales, while France is to release a report on consumer spending.
Switzerland is to publish the KOF economic barometer, designed to predict the direction of the economy over the following six months.
Later in the day, Canada is to release government data on second quarter GDP, the broadest measure of economic activity and the primary gauge of the economy's health.
The U.S. is to round up the week with official data on personal spending and inflation as well as a report on manufacturing activity in the Chicago area. Meanwhile, the University of Michigan is to publish revised data on consumer sentiment and inflation expectations.
Financial leaders said the G-20 nations are “committed to a strong and coordinated international response to address the renewed challenges facing the global economy,” after talks in Washington.
Leaders also called on the European Union to take quick action to resolve the financial crisis in the euro zone.
The statement came after warnings from the International Monetary Fund and the U.S. Federal Reserve that the global economic recovery is at risk.
After its policy setting meeting on Wednesday the Fed said there were “significant downside risks” facing the U.S. economy. The central bank unveiled a plan to trade short-term bonds for long-term ones, in an attempt to boost the economy by pushing down long-term interest rates, a move dubbed “Operation Twist.”
Earlier in the week, the IMF cut its growth forecasts for the global economy to 4% for 2011 and 2012 and said the world economy had entered "a dangerous new phase."
Despite repeated assurances from EU officials, investors have remained concerned over the possibility of a debt default by Greece, boosting safe haven demand for the greenback and the yen.
The yen hit a 10-year high against the euro on Thursday and has been trading close to a record high against the dollar, prompting speculation that Japan may mount a fresh intervention to weaken the yen in order to protect its largely export driven economy.
On Friday, a senior Japanese finance ministry official said Japan cannot curb the appreciation of its currency by setting a cap on the yen, as Switzerland has done, as that would effectively mean abandoning monetary policy.
Elsewhere, the euro rose against the Swiss franc last week, amid speculation that the Swiss National Bank may move its targeted exchange rate for the franc to 1.25 from 1.20 per euro. A spokesman for the central bank declined to comment.
Meanwhile, the pound slumped to a one-year low against the dollar after the minutes of the Bank of England’s September meeting indicated that the bank is leaning towards implementing more monetary easing, possibly as early as next month.
In the week ahead, developments in Greece look likely to remain in focus while investors will be closely watching U.S. data on second quarter economic growth in order to gauge the strength of the U.S. economic recovery.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, September 26
New Zealand is to publish official data on its trade balance, the difference in value between imported and exported goods over the month.
In the euro zone, the Ifo Institute for Economic Research is to publish a report on German business sentiment, a leading indicator of economic health.
Later in the day, the U.S. is to produce government data on new home sales, a leading indicator of demand in the housing market.
Tuesday, September 27
In Switzerland, UBS bank is to publish its consumption indicator, an important indicator of economic health. In the euro zone, Germany is to release a report on consumer climate.
Elsewhere, in the U.K., BoE monetary policy committee member Adam Posen is to speak; his comments will be closely watched for clues to the future possible direction of monetary policy. The U.K. is also to publish industry data on retail sales, an important indicator of economic health.
Later in the day, the U.S. is to publish industry data on house prices, as well as a report on consumer confidence, a leading indicator of consumer spending.
Wednesday, September 28
In the euro zone, Germany is to publish preliminary data on consumer price inflation, which accounts for the majority of overall inflation. The BoE is to release the results of its credit conditions survey, an important indicator of consumer confidence.
Later in the day, the U.S. is to produce official data on durable goods orders, a leading indicator of production. The country is also to publish government data on crude oil stockpiles.
Also Wednesday, SNB Vice Chairman Thomas Jordan is to speak; his comments will be closely scrutinized for clues to the future possible direction of monetary policy.
Thursday, September 29
Japan is to publish official data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity. Meanwhile, Bank of Japan Governor Masaaki Shirakawa is to speak; his comments will be closely watched by markets.
In the euro zone, Germany is to publish a government report on employment change, an important indicator of economic health. Elsewhere, the BoE is to produce a report on net lending to individuals, an important indicator of consumer confidence.
Canada is to publish official data on raw material price inflation, a leading indicator of consumer inflation.
Meanwhile, the U.S. is to publish its weekly report on initial jobless claims, as well as industry data on pending home sales. The country is also to publish revised data on second quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy's health. In addition, Fed Chairman Ben Bernanke is to speak; his comments will be closely watched for clues regarding future monetary policy.
Friday, September 30
New Zealand is to publish a government report on building consents, a leading gauge of future construction activity. The country is also to publish a report on business confidence, while Australia is to produce official data on private sector credit.
Japan is to produce a string of data with reports on household spending, inflation, unemployment, housing starts and manufacturing, as well as preliminary data on industrial production.
The U.K. is to release data on consumer confidence, while the euro zone is to publish official data on unemployment as well as preliminary data on consumer price inflation, which accounts for a majority of overall inflation. Meanwhile, Germany is to publish official data on retail sales, while France is to release a report on consumer spending.
Switzerland is to publish the KOF economic barometer, designed to predict the direction of the economy over the following six months.
Later in the day, Canada is to release government data on second quarter GDP, the broadest measure of economic activity and the primary gauge of the economy's health.
The U.S. is to round up the week with official data on personal spending and inflation as well as a report on manufacturing activity in the Chicago area. Meanwhile, the University of Michigan is to publish revised data on consumer sentiment and inflation expectations.