Investing.com - The euro ended the week lower against the U.S. dollar on Friday, after results of independent stress tests showed that Spanish banks needed EUR60 billion in capital, while downbeat manufacturing data in the U.S. boosted demand for the safe haven greenback.
The Bank of Spain announced Friday that the recapitalization needs of Spanish banks amounted to EUR59.3 billion, broadly in line with market expectations.
"The results confirm that the Spanish banking sector is mostly solvent and viable, even in an extremely adverse and highly unlikely macroeconomic setting," the Economics Ministry said in a press release following the results.
The stress test results came a day after the Spanish government announced a crisis budget for 2013, based mostly on spending cuts, in what many analysts see as an effort to pre-empt the likely conditions of an international bailout.
The yield on Spanish 10-year government bonds ended the week at 5.94%.
Market players will be watching for a potential downgrade of Spanish sovereign debt by Moody's Investors Service in the coming days as the deadline for that review closes.
In the U.S., data Friday showed that the Chicago purchasing managers' index fell unexpectedly in September, entering contraction territory for the first time since September 2009.
The index fell to seasonally adjusted 49.7 in September from 53.0 the previous month. Analysts had expected the Chicago PMI to remain unchanged at 53.0 in September.
Separately, a revised report by the University of Michigan showed that its index of consumer sentiment fell more-than-expected in September, ticking down to a seasonally adjusted 78.3 from 79.2 the previous month. Analysts had expected the index o fall to 79.0 in September.
Also Friday, the U.S. Bureau of Economic Analysis said that personal spending rose in line with expectations in August, ticking up 0.5% after a 0.4% increase the previous month.
The pound also pushed lower against the greenback, falling to a two-week low after ratings agency Fitch affirmed the U.K.'s triple-A sovereign rating but warned that the likelihood of a downgrade has increased due to its sizeable budget deficit.
On Thursday, data showed that the U.K.’s current account deficit widened to a record-high GBP20.8 in the second quarter, up from a revised GBP15.4 billion in the three months to March.
Elsewhere, the broadly higher greenback ended the week close to a three-week top against its Canadian counterpart after government data showed that Canada's gross domestic product expanded by a seasonally adjusted 0.2% in July, compared to growth of 0.1% the previous month.
In the week ahead, markets will be focusing on the European Central Bank’s policy meeting on Thursday, as traders continue to eye developments in Spain.
The U.S. is to release its monthly report on non-farm payrolls on Friday, which will allow investors to gauge the strength of the faltering labor market.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, October 1
Japan is to publish data on the Tankan manufacturing and non-manufacturing indexes, both leading indicators of economic health.
Switzerland is to release official data on retail sales, followed by the SVME purchasing managers’ index.
In the euro zone, the single currency bloc is to release revised data on manufacturing activity, as well as official data on the unemployment rate throughout the region.
Also in the euro zone, Spain and Italy are to release official data on manufacturing activity.
The U.K. is to release data on manufacturing activity, a leading indicator of economic health, as well as a report on net lending to individuals.
Later in the day, the U.S. is to publish a report by the Institute for Supply Management on manufacturing PMI, a leading indicator of economic health.
Also Monday, Federal Reserve Chairman Ben Bernanke is due to speak at the Economic Club of Indiana, in Indianapolis. Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future monetary policy.
Tuesday, October 2
The Reserve Bank of Australia is to announce its benchmark interest rate; the announcement is to be accompanied by the bank’s rate statement, which contains insights into current economic conditions from the bank’s perspective. The country is also to release official data on the current account.
Japan is to produce government data on average cash earnings, which is directly correlated with spending.
In Europe, Spain is to produce official data on change in the number of unemployed people, while the single currency bloc is also to release data on producer price inflation.
Meanwhile, the U.K. is to publish industry data on house price inflation, a leading indicator demand in the housing sector, as well as data on construction sector activity.
Wednesday, October 3
The euro zone is to release revised data on service sector activity, as well as official data on retail sales.
Elsewhere in Europe, the U.K. is also to release data on service sector activity.
Later in the day, the U.S. is to produce industry data on non-farm employment change, followed by a report by the Institute for Supply Management on non-manufacturing activity, as well as government data on crude oil stockpiles.
Thursday, October 4
Australia is to produce official data on building approvals, an important gauge of the construction industry. The country is also set to release a report on retail sales.
In the euro zone, the ECB is to announce its benchmark interest rate. The announcement is to be followed by a press conference with bank head Mario Draghi, which will be closely watched for details of the bank’s bond purchasing program.
Meanwhile, in the U.K., the Bank of England is to announce its benchmark interest rate.
The U.S. is to release weekly government data on unemployment claims, as well as official data on factory orders. Later in the day, the Federal Reserve is to produce the minutes of its September policy meeting.
Also Thursday, Canada is to release a PMI report by the Richard Ivey School of Business.
Friday, October 5
The Bank of Japan is to announce its benchmark interest rate; the announcement is to be accompanied by the bank’s rate statement, which contains insights into current economic conditions from the bank’s perspective.
In Europe, the Swiss National Bank is to publish a report on foreign currency reserves.
Elsewhere, Germany is to release a report on factory orders, a leading indicator of production, while the single currency bloc is release final data on economic growth.
Later in the day, Canada is to release official data on building permits, a key gauge of future construction activity, as well as on employment change and the unemployment rate.
The U.S. is to round up the week with closely watched official data on non-farm payrolls and the unemployment rate, as well as a report on average hourly earnings.
The Bank of Spain announced Friday that the recapitalization needs of Spanish banks amounted to EUR59.3 billion, broadly in line with market expectations.
"The results confirm that the Spanish banking sector is mostly solvent and viable, even in an extremely adverse and highly unlikely macroeconomic setting," the Economics Ministry said in a press release following the results.
The stress test results came a day after the Spanish government announced a crisis budget for 2013, based mostly on spending cuts, in what many analysts see as an effort to pre-empt the likely conditions of an international bailout.
The yield on Spanish 10-year government bonds ended the week at 5.94%.
Market players will be watching for a potential downgrade of Spanish sovereign debt by Moody's Investors Service in the coming days as the deadline for that review closes.
In the U.S., data Friday showed that the Chicago purchasing managers' index fell unexpectedly in September, entering contraction territory for the first time since September 2009.
The index fell to seasonally adjusted 49.7 in September from 53.0 the previous month. Analysts had expected the Chicago PMI to remain unchanged at 53.0 in September.
Separately, a revised report by the University of Michigan showed that its index of consumer sentiment fell more-than-expected in September, ticking down to a seasonally adjusted 78.3 from 79.2 the previous month. Analysts had expected the index o fall to 79.0 in September.
Also Friday, the U.S. Bureau of Economic Analysis said that personal spending rose in line with expectations in August, ticking up 0.5% after a 0.4% increase the previous month.
The pound also pushed lower against the greenback, falling to a two-week low after ratings agency Fitch affirmed the U.K.'s triple-A sovereign rating but warned that the likelihood of a downgrade has increased due to its sizeable budget deficit.
On Thursday, data showed that the U.K.’s current account deficit widened to a record-high GBP20.8 in the second quarter, up from a revised GBP15.4 billion in the three months to March.
Elsewhere, the broadly higher greenback ended the week close to a three-week top against its Canadian counterpart after government data showed that Canada's gross domestic product expanded by a seasonally adjusted 0.2% in July, compared to growth of 0.1% the previous month.
In the week ahead, markets will be focusing on the European Central Bank’s policy meeting on Thursday, as traders continue to eye developments in Spain.
The U.S. is to release its monthly report on non-farm payrolls on Friday, which will allow investors to gauge the strength of the faltering labor market.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, October 1
Japan is to publish data on the Tankan manufacturing and non-manufacturing indexes, both leading indicators of economic health.
Switzerland is to release official data on retail sales, followed by the SVME purchasing managers’ index.
In the euro zone, the single currency bloc is to release revised data on manufacturing activity, as well as official data on the unemployment rate throughout the region.
Also in the euro zone, Spain and Italy are to release official data on manufacturing activity.
The U.K. is to release data on manufacturing activity, a leading indicator of economic health, as well as a report on net lending to individuals.
Later in the day, the U.S. is to publish a report by the Institute for Supply Management on manufacturing PMI, a leading indicator of economic health.
Also Monday, Federal Reserve Chairman Ben Bernanke is due to speak at the Economic Club of Indiana, in Indianapolis. Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future monetary policy.
Tuesday, October 2
The Reserve Bank of Australia is to announce its benchmark interest rate; the announcement is to be accompanied by the bank’s rate statement, which contains insights into current economic conditions from the bank’s perspective. The country is also to release official data on the current account.
Japan is to produce government data on average cash earnings, which is directly correlated with spending.
In Europe, Spain is to produce official data on change in the number of unemployed people, while the single currency bloc is also to release data on producer price inflation.
Meanwhile, the U.K. is to publish industry data on house price inflation, a leading indicator demand in the housing sector, as well as data on construction sector activity.
Wednesday, October 3
The euro zone is to release revised data on service sector activity, as well as official data on retail sales.
Elsewhere in Europe, the U.K. is also to release data on service sector activity.
Later in the day, the U.S. is to produce industry data on non-farm employment change, followed by a report by the Institute for Supply Management on non-manufacturing activity, as well as government data on crude oil stockpiles.
Thursday, October 4
Australia is to produce official data on building approvals, an important gauge of the construction industry. The country is also set to release a report on retail sales.
In the euro zone, the ECB is to announce its benchmark interest rate. The announcement is to be followed by a press conference with bank head Mario Draghi, which will be closely watched for details of the bank’s bond purchasing program.
Meanwhile, in the U.K., the Bank of England is to announce its benchmark interest rate.
The U.S. is to release weekly government data on unemployment claims, as well as official data on factory orders. Later in the day, the Federal Reserve is to produce the minutes of its September policy meeting.
Also Thursday, Canada is to release a PMI report by the Richard Ivey School of Business.
Friday, October 5
The Bank of Japan is to announce its benchmark interest rate; the announcement is to be accompanied by the bank’s rate statement, which contains insights into current economic conditions from the bank’s perspective.
In Europe, the Swiss National Bank is to publish a report on foreign currency reserves.
Elsewhere, Germany is to release a report on factory orders, a leading indicator of production, while the single currency bloc is release final data on economic growth.
Later in the day, Canada is to release official data on building permits, a key gauge of future construction activity, as well as on employment change and the unemployment rate.
The U.S. is to round up the week with closely watched official data on non-farm payrolls and the unemployment rate, as well as a report on average hourly earnings.