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Forex - Weekly outlook: September 5-9

Published 09/04/2011, 04:38 AM
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Investing.com – The U.S. dollar ended sharply lower against the broadly stronger Swiss franc on Friday, after government data showed that the U.S. economy created no jobs in August, underlining concerns over a slowdown in global economic growth.

The Department of Labor said U.S. non-farm payrolls were unchanged last month, the weakest reading since September 2010, after rising by a downwardly revised 85,000 in July. Economists had expected non-farm payrolls to rise by 74,000 in August. The jobless rate remained unchanged at 9.1%.

The data added to expectations that the Federal Reserve will embark on a third round of monetary easing after Fed Chairman Ben Bernanke said last week that the central bank’s September meeting would be extended from one day to two, in order to give policymakers time to examine their options.

The euro also ended the week sharply lower against the Swissie amid concerns that the region’s sovereign debt crisis is deepening. On Friday, negotiations over fresh bailout funds for Greece were suspended after the country failed to meet deficit reduction targets.

The announcement saw the cost of insuring Italian sovereign debt against default surge to a euro-lifetime high, amid uncertainty over the implementation of Italian austerity measures.

With the Swiss franc and yen re-approaching record highs against the greenback the threat of intervention by the Swiss National Bank and the Bank of Japan has curbed gains in the traditional safe haven currencies.

On Friday, the Swiss government issued a statement declaring that all federal parties stood behind the SNB's actions and asserting that the central bank was solely responsible for currency policy.

Earlier in the week, the government pledged CHF870 million as part of a stimulus program to help offset the economic impact of the strong franc.

In the week ahead, investors will be looking to a speech by U.S. President Barack Obama to Congress on Thursday, for indications on how he plans to boost job creation.

Meanwhile, the European Central Bank is to announce its benchmark interest rate on Thursday, but recent comments by ECB President Jean-Claude Trichet indicated that rates may remain on hold in the coming months.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, September 5

Australia is to publish government data on company operating profits, a leading indicator of economic health, as well as industry data on service sector activity. The country is also to publish a report on the change in the number of jobs advertized in newspapers and on the internet, an important signal of demand in the jobs market.

The euro zone is to publish official data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity. The single currency bloc is also to release revised data on service sector growth as well as a report on investor confidence.

Meanwhile, markets in the U.S. and Canada will remain closed for the Labor Day holiday, which marks the traditional end of summer.

Tuesday, September 6

The Reserve Bank of Australia is to announce it benchmark interest rate. The bank’s rate statement will be closely watched as it discusses the economic outlook and offers insights into future rate decisions. Australia is also to publish official data on home loans, a leading indicator of demand in the housing sector, as well as data on the country’s current account.

The U.K. is to release industry data on retail sales, an important indicator of economic health. Elsewhere, Switzerland is to release official data on consumer price inflation, which accounts for a majority of overall inflation.

The euro zone is to produce revised data on second quarter gross domestic product, while Germany is to release official data on factory orders, a leading indicator of production.

In the U.S., the Institute of Supply Management is to produce a report on service sector activity, a leading indicator of economic health.

Wednesday, September, 7

Australia is to produce official data on second quarter gross domestic product, an all-inclusive measure of economic activity and the most important indicator of economic growth.

Elsewhere, the Bank of Japan is to announce its benchmark interest rate. The announcement will be followed up by a closely watched press conference, which will outline the factors surrounding the rate decision and discuss the economic outlook.

The U.K. is to publish official data on manufacturing production, a leading indicator of economic health. Later in the day, the U.K. National Institute of Economic and Social Research is to publish its monthly GDP estimate. Meanwhile, in the euro zone, Germany is to produce official data on industrial production.

In addition, the Bank of Canada is to announce its benchmark interest rate. The bank’s rate statement will be closely watched as it gives useful insights into the bank’s view of the economic outlook. Canada is also to publish the Ivey PMI, a leading indicator of economic health.

Also Wednesday, Federal Reserve Bank of Chicago President Charles Evans is to speak. His comments will be closely watched for clues to the future direction of monetary policy. The Fed is also to publish its beige book, which looks at regional economic conditions.

Thursday, September 8

Japan is to publish official data on machinery orders, a leading indicator of manufacturing production. Meanwhile, Australia is to publish government data on employment change and the unemployment rate, a leading indicator of economic health.

In the U.K., the Bank of England is to announce its benchmark interest rate. Later in the day, the ECB is also to announce its interest rate decision. The announcement will be followed with a closely watched press conference by ECB head, Jean-Claude Trichet, who will outline in detail the factors affecting the rate decision.

In addition, Canada is to produce government data on building permits, a leading indicator of future construction activity. The country is also to release official data on the trade balance and house price inflation.

The U.S. is to publish its weekly report on initial jobless claims, as well as official data on the trade balance and crude oil stockpiles.

Also Thursday, U.S. President Barack Obama is to make a speech to Congress, outlining how he intends to stimulate employment creation and lower unemployment, as part of his jobs plan.

Friday, September 9

Japan is to produce revised data on second quarter GDP, an all-inclusive measure of economic activity and the most important indicator of economic growth.

The U.K. is to publish government data on producer price inflation input. The country is also to release official data on the trade balance, the difference in value between imported and exported goods and services over the reported month.

Canada is to round up the week with government data on employment change and the overall unemployment rate, a leading indicator of economic health. The country is also to publish official data on housing starts, an excellent indicator of demand in the housing sector, as well as a report on labor productivity, an important inflationary indicator.


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