Investing.com – The euro was higher against the U.S. dollar on Friday, paring some of the week’s losses amid speculation that the European Central Bank may lend to the International Monetary Fund for sovereign bailouts and as Italian and Spanish borrowing costs eased.
In Italy, newly-appointed Prime Minister Mario Monti won a parliamentary confidence vote, giving him a mandate to begin drafting his agenda, which includes passing emergency measures to restore investor confidence, as well as broader structural reforms.
Following the vote, Italian bond yields found support, falling back below the 7% threshold widely seen as unsustainable for borrowing in the long term. Spanish bond yields also eased after rising close to 7% at a government bond auction earlier in the week, as the ECB purchased Italian and Spanish government debt.
With a debt of approximately EUR2 trillion, Italy is widely viewed in the market as too big to bailout.
The pound was also higher against the dollar on Friday, tracking gains in the euro but sterling remained under pressure after Bank of England policymaker Martin Weale said there was a "very strong case" for extending the central bank's monetary easing program next year.
Elsewhere, the greenback rose to a five-week high against the Swiss franc on Thursday, amid speculation that the Swiss National Bank may lift the 1.20 floor against the euro, to reduce the risk of deflation and bolster growth.
The commodity linked Australian and New Zealand dollars were down for a third week against the greenback, with the Aussie briefly dipping below parity as ongoing concerns over the euro zone’s debt crisis weighed on demand for higher yielding assets.
Also last week, U.S. data showed that initial jobless claims unexpectedly fell to a seven-month low, while housing starts rose more-than-expected, supporting risk appetite.
In the week ahead, investors will be keeping a close eye on developments within the euro zone. Meanwhile, U.S. data on third quarter growth and durable goods orders will be closely watched, in order to gauge the strength of the country’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, November 21
The Bank of Japan is to publish the minutes of its November policy meeting. The minutes contain insights into current economic conditions for the bank’s perspective. Japan is also to publish official data on the trade balance, the difference in value between imported and exported goods.
The U.K. is to release industry data on house price inflation, an important indicator of economic health. Meanwhile, the euro zone is to publish official data on the current account.
Later in the day, Canada is to produce government data on wholesale sales, an important indicator of economic health, while the U.S. is to release industry data on existing home sales.
Tuesday, November 22
New Zealand is to release official data on inflation expectations, an important indicator of economic growth. Elsewhere, Switzerland is to release official data on the trade balance.
The U.K. is to produce official data on public sector borrowing, while the euro zone is to publish a report on consumer confidence.
Canada is to publish official data on retail sales, the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.
Later Tuesday, the U.S. is to release preliminary data on gross domestic product, the broadest measure of economic activity and the leading indicator of the economy's health. In addition, the U.S. Federal Reserve is to publish the minutes of its November policy meeting.
Wednesday, November 23
Australia is to publish an index of leading economic indicators, which is designed to predict the outcome of the economy over the following six months, as well as official data on construction work done, an important gauge of the construction industry. In Japan, markets are to remain closed for a national holiday.
The euro zone is to produce preliminary data on manufacturing and service sector growth, while France and Germany are to publish individual reports. The single currency bloc is also to publish official data on industrial new orders, a leading indicator of production.
In the U.K., the BoE is to publish the minutes of its November policy meeting. The country is also to produce industry data on mortgage approvals, an important indicator of demand in the housing sector.
The U.S. is to publish a string of economic data, including a government report on durable goods orders, a leading indicator of production. The country is also to publish its weekly report on initial jobless claims, in addition to data on crude oil stockpiles, inflation, personal income and personal spending. Meanwhile, the University of Michigan is to release revised data on inflation expectations and consumer sentiment.
Also Wednesday, Bank of Canada Governor Mark Carney is to speak; his comments will be closely watched for any clues to the future possible direction of monetary policy. Finally, New Zealand is to release government data on the trade balance.
Thursday, November 24
In the euro zone, Germany is to release revised data on third quarter GDP. Meanwhile, the Ifo Institute for Economic Research is to publish a report on German business climate, a leading indicator of economic health.
The U.K. is also to publish revised data on third quarter economic growth. In addition, the U.K. is to publish data on industrial order expectations, as well as preliminary data on business investment, a leading indicator of economic health.
Also Thursday, markets in the U.S. are to remain closed for the Thanksgiving holiday.
Friday, November 25
Japan is to publish official data on inflation, a leading indicator of economic health. Later in the day, Germany is to publish official data on import prices, while Italy is to release government data on retail sales.
In Italy, newly-appointed Prime Minister Mario Monti won a parliamentary confidence vote, giving him a mandate to begin drafting his agenda, which includes passing emergency measures to restore investor confidence, as well as broader structural reforms.
Following the vote, Italian bond yields found support, falling back below the 7% threshold widely seen as unsustainable for borrowing in the long term. Spanish bond yields also eased after rising close to 7% at a government bond auction earlier in the week, as the ECB purchased Italian and Spanish government debt.
With a debt of approximately EUR2 trillion, Italy is widely viewed in the market as too big to bailout.
The pound was also higher against the dollar on Friday, tracking gains in the euro but sterling remained under pressure after Bank of England policymaker Martin Weale said there was a "very strong case" for extending the central bank's monetary easing program next year.
Elsewhere, the greenback rose to a five-week high against the Swiss franc on Thursday, amid speculation that the Swiss National Bank may lift the 1.20 floor against the euro, to reduce the risk of deflation and bolster growth.
The commodity linked Australian and New Zealand dollars were down for a third week against the greenback, with the Aussie briefly dipping below parity as ongoing concerns over the euro zone’s debt crisis weighed on demand for higher yielding assets.
Also last week, U.S. data showed that initial jobless claims unexpectedly fell to a seven-month low, while housing starts rose more-than-expected, supporting risk appetite.
In the week ahead, investors will be keeping a close eye on developments within the euro zone. Meanwhile, U.S. data on third quarter growth and durable goods orders will be closely watched, in order to gauge the strength of the country’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, November 21
The Bank of Japan is to publish the minutes of its November policy meeting. The minutes contain insights into current economic conditions for the bank’s perspective. Japan is also to publish official data on the trade balance, the difference in value between imported and exported goods.
The U.K. is to release industry data on house price inflation, an important indicator of economic health. Meanwhile, the euro zone is to publish official data on the current account.
Later in the day, Canada is to produce government data on wholesale sales, an important indicator of economic health, while the U.S. is to release industry data on existing home sales.
Tuesday, November 22
New Zealand is to release official data on inflation expectations, an important indicator of economic growth. Elsewhere, Switzerland is to release official data on the trade balance.
The U.K. is to produce official data on public sector borrowing, while the euro zone is to publish a report on consumer confidence.
Canada is to publish official data on retail sales, the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.
Later Tuesday, the U.S. is to release preliminary data on gross domestic product, the broadest measure of economic activity and the leading indicator of the economy's health. In addition, the U.S. Federal Reserve is to publish the minutes of its November policy meeting.
Wednesday, November 23
Australia is to publish an index of leading economic indicators, which is designed to predict the outcome of the economy over the following six months, as well as official data on construction work done, an important gauge of the construction industry. In Japan, markets are to remain closed for a national holiday.
The euro zone is to produce preliminary data on manufacturing and service sector growth, while France and Germany are to publish individual reports. The single currency bloc is also to publish official data on industrial new orders, a leading indicator of production.
In the U.K., the BoE is to publish the minutes of its November policy meeting. The country is also to produce industry data on mortgage approvals, an important indicator of demand in the housing sector.
The U.S. is to publish a string of economic data, including a government report on durable goods orders, a leading indicator of production. The country is also to publish its weekly report on initial jobless claims, in addition to data on crude oil stockpiles, inflation, personal income and personal spending. Meanwhile, the University of Michigan is to release revised data on inflation expectations and consumer sentiment.
Also Wednesday, Bank of Canada Governor Mark Carney is to speak; his comments will be closely watched for any clues to the future possible direction of monetary policy. Finally, New Zealand is to release government data on the trade balance.
Thursday, November 24
In the euro zone, Germany is to release revised data on third quarter GDP. Meanwhile, the Ifo Institute for Economic Research is to publish a report on German business climate, a leading indicator of economic health.
The U.K. is also to publish revised data on third quarter economic growth. In addition, the U.K. is to publish data on industrial order expectations, as well as preliminary data on business investment, a leading indicator of economic health.
Also Thursday, markets in the U.S. are to remain closed for the Thanksgiving holiday.
Friday, November 25
Japan is to publish official data on inflation, a leading indicator of economic health. Later in the day, Germany is to publish official data on import prices, while Italy is to release government data on retail sales.