Forexpros - The euro slumped to a two-year low against the U.S. dollar on Friday, as investor concerns over the debt crisis in the euro zone mounted, amid fears that Spain could require a full international bailout.
EUR/USD hit 1.2143 on Friday, the pair’s lowest since mid-June 2010; the pair subsequently consolidated at 1.2155 by close of trade, down 0.90% on the week.
The pair is likely to find support at 1.1956, the low of June 10, 2010 and resistance at 1.2282, Friday’s high.
The euro weakened broadly amid growing fears that Spain will need a full bailout, after the state of Valencia requested financial aid from the government. In addition, Spain’s government cut growth forecasts for 2013 and said the economy would stay in recession next year.
The news sent Spain’s borrowing costs soaring, with the yield on Spanish 10-year bonds rising to 7.26%, above the critical 7% threshold widely considered unsustainable in the long term.
Following the news, the single currency fell to an 11-year low against the yen and dropped to its lowest in three-and-a-half years against the pound. The single currency also hit record lows against the Australian, New Zealand and Canadian dollars.
The U.S. dollar came under selling pressure earlier in the week as market participants focused on testimony by Federal Reserve Chairman Ben Bernanke amid speculation that weak economic data out of the U.S. would prompt a third round of quantitative easing by the central bank.
Bernanke said growth had lost momentum in the first half of the year and added that progress on cutting the U.S. unemployment rate was “frustratingly” slow.
The Fed chief refrained from indicating whether a fresh round of stimulus was imminent, but reiterated that the central bank was prepared to take further action to support the economic recovery if necessary.
In the week ahead, investors will be focusing on developments in Spain, while euro zone data on manufacturing and service sector activity will be closely watched amid fears of the impact of the region's debt crisis on economic growth.
Market participants will also be anticipating U.S. data on second quarter economic growth, in order to gauge the strength of the country’s recovery.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, July 23
The euro zone is to publish a report on consumer confidence.
Tuesday, July 24
The euro zone is to release preliminary data on manufacturing and service sector activity, leading indicators of economic health. Germany and France are also to release individual reports.
Later Tuesday, Federal Reserve Chairman Ben Bernanke is to speak; his comments will be closely watched for clues to the possible future direction of monetary policy. The U.S. is also to release preliminary data on manufacturing activity, a leading indicator of economic health.
Wednesday, July 25
In the euro zone, the Ifo Institute for Economic Research is to release data on German business climate, a leading indicator of economic health.
Also Wednesday, the U.S. is to publish official data on new home sales, a leading indicator of economic health, as well as data on crude oil stockpiles.
Thursday, July 26
In the euro zone, the Gfk Institute is to release data on German consumer climate, a leading indicator of consumer spending. The euro zone is also to publish data on M3 money supply.
Later in the day, the U.S. is to release official data on durable goods orders, a leading indicator of production, as well as data on pending home sales and initial jobless claims.
Friday, July 27
In the euro zone, Germany is to produce preliminary data on consumer price inflation, which accounts for the majority of overall inflation.
The U.S. is to round up the week with advance data on second quarter gross domestic product, the broadest measure of economic activity and the foremost indicator of the economy's health. In addition, the University of Michigan is to release revised data on consumer sentiment and inflation expectations.
EUR/USD hit 1.2143 on Friday, the pair’s lowest since mid-June 2010; the pair subsequently consolidated at 1.2155 by close of trade, down 0.90% on the week.
The pair is likely to find support at 1.1956, the low of June 10, 2010 and resistance at 1.2282, Friday’s high.
The euro weakened broadly amid growing fears that Spain will need a full bailout, after the state of Valencia requested financial aid from the government. In addition, Spain’s government cut growth forecasts for 2013 and said the economy would stay in recession next year.
The news sent Spain’s borrowing costs soaring, with the yield on Spanish 10-year bonds rising to 7.26%, above the critical 7% threshold widely considered unsustainable in the long term.
Following the news, the single currency fell to an 11-year low against the yen and dropped to its lowest in three-and-a-half years against the pound. The single currency also hit record lows against the Australian, New Zealand and Canadian dollars.
The U.S. dollar came under selling pressure earlier in the week as market participants focused on testimony by Federal Reserve Chairman Ben Bernanke amid speculation that weak economic data out of the U.S. would prompt a third round of quantitative easing by the central bank.
Bernanke said growth had lost momentum in the first half of the year and added that progress on cutting the U.S. unemployment rate was “frustratingly” slow.
The Fed chief refrained from indicating whether a fresh round of stimulus was imminent, but reiterated that the central bank was prepared to take further action to support the economic recovery if necessary.
In the week ahead, investors will be focusing on developments in Spain, while euro zone data on manufacturing and service sector activity will be closely watched amid fears of the impact of the region's debt crisis on economic growth.
Market participants will also be anticipating U.S. data on second quarter economic growth, in order to gauge the strength of the country’s recovery.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, July 23
The euro zone is to publish a report on consumer confidence.
Tuesday, July 24
The euro zone is to release preliminary data on manufacturing and service sector activity, leading indicators of economic health. Germany and France are also to release individual reports.
Later Tuesday, Federal Reserve Chairman Ben Bernanke is to speak; his comments will be closely watched for clues to the possible future direction of monetary policy. The U.S. is also to release preliminary data on manufacturing activity, a leading indicator of economic health.
Wednesday, July 25
In the euro zone, the Ifo Institute for Economic Research is to release data on German business climate, a leading indicator of economic health.
Also Wednesday, the U.S. is to publish official data on new home sales, a leading indicator of economic health, as well as data on crude oil stockpiles.
Thursday, July 26
In the euro zone, the Gfk Institute is to release data on German consumer climate, a leading indicator of consumer spending. The euro zone is also to publish data on M3 money supply.
Later in the day, the U.S. is to release official data on durable goods orders, a leading indicator of production, as well as data on pending home sales and initial jobless claims.
Friday, July 27
In the euro zone, Germany is to produce preliminary data on consumer price inflation, which accounts for the majority of overall inflation.
The U.S. is to round up the week with advance data on second quarter gross domestic product, the broadest measure of economic activity and the foremost indicator of the economy's health. In addition, the University of Michigan is to release revised data on consumer sentiment and inflation expectations.
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