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The dollar was broadly higher against the other major currencies on Friday as upbeat U.S. data fuelled expectations for an early end to the Federal Reserve’s easing program, while weak data in the euro zone and U.K. supported safe haven demand.
Data on Friday showed that the U.S. manufacturing sector expanded at its fastest pace since June 2011 last month, while a separate report showed that U.S. consumer confidence rose in February.
The Institute for Supply Management said its manufacturing purchasing managers’ index rose to 54.2 from 53.1 in January, while the final reading of the University of Michigan’s consumer sentiment index came in at 77.6, from a preliminary reading of 76.3.
In contrast, revised data showed that manufacturing activity in the euro zone contracted in February at the same pace as in January, with the manufacturing PMI unchanged at 47.8.
The weak data added to speculation over a possible rate cut by the European Central Bank at its upcoming policy meeting on Thursday.
The single currency also remained under pressure amid concerns that that Italy would not be able to continue to implement structural reforms and austerity measures following inconclusive election results.
The euro fell below 1.30 against the dollar for the first time since December 11, with EUR/USD hitting a session low of 1.2967, before settling at 1.3018, down 0.29% for the day and 0.38% lower for the week.
Meanwhile, the pound fell below 1.50 against the dollar for the first time since July 2010 as unexpectedly weak U.K. manufacturing data added to expectations that the Bank of England will resume its quantitative easing program.
The U.K. manufacturing PMI fell to 47.9 from 50.5 in January, well below the 50 level that divides growth from contraction, as employment levels in the sector fell at the fastest pace in more than three years.
GBP/USD hit a session low of 1.4986 before settling at 1.5035, 0.85% lower for the day and down 0.86% for the week.
The dollar rallied more than 1% against the yen on Friday, the largest one-day gain in more than three weeks amid increasing speculation that the Bank of Japan will step up easing measures after Prime Minister Shinzo Abe nominated an advocate of aggressive easing to head the central bank.
USD/JPY hit a session high of 93.69, the highest since February 25, before settling at 93.54, 1.06% higher for the day and up 1.26% for the week.
The dollar also found support amid worries over U.S. spending cuts, known as the sequester, after lawmakers failed to reach an agreement on a deficit reduction plan.
Elsewhere, the Canadian dollar pulled back from multi-month lows against the greenback on Friday after data showed the Canadian economy contracted by 0.2% in December, in line with expectations, indicating that markets had been prepared for weaker-than-forecast data.
The Canadian economy expanded by an annualized 0.6% in the fourth quarter, matching forecasts.
USD/CAD hit a session high of 1.0342, the pair’s highest since June 28, before falling back to settle at 1.0268, 0.38% lower for the day and just 0.09% higher for the week.
In the week ahead, markets will be focusing on interest rate decisions by the ECB, BoE, Reserve Bank of Australia, Bank of Canada and the BoJ.
In addition, Friday’s data on U.S. nonfarm payrolls will be closely watched as investors attempt to gauge the strength of the 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, March 4
Australia is to publish official data on building approvals, a leading indicator of future construction activity, as well as data on company operating profits.
In the euro zone, Spain is to release government data on the change in the number of people unemployed.
The U.K. is to release data on construction sector activity, a leading indicator of economic health.
Tuesday, March 5
The RBA is to announce its benchmark interest rate. The rate announcement is to be accompanied by the bank’s rate statement, which contains important insights into current and future economic conditions from the bank’s perspective.
Australia is also to produce official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. Elsewhere, Japan is to publish government data on average cash earnings.
The euro zone is to release final data on service sector activity, while Span and Italy are to release individual reports. The bloc is also to produce official data on retail sales.
The U.K. is to produce data on service sector activity, a leading economic indicator, as well as industry data on retail sales.
In the U.S., the Institute of Supply Management is to release a report on service sector activity, a leading indicator of economic health.
Wednesday, March 6
Australia is to release official data on fourth quarter economic growth, the broadest indicator of economic activity and the leading measure of the economy's health.
The euro zone is to release revised data on fourth quarter gross domestic product.
The BoC is to announce its benchmark interest rate. The rate announcement is to be accompanied by the bank’s rate statement, which contains important insights into current and future economic conditions from the bank’s perspective. Canada is also to release the Ivey PMI, a leading economic indicator.
The U.S. is to publish data on ADP nonfarm payrolls, which leads government data on nonfarm payrolls by two days. The U.S. is also to release official data on factory orders and crude oil stockpiles.
Thursday, March 7
Australia is to release official data on the trade balance, the difference in value between imports and exports.
The BoJ is to announce its benchmark interest rate. The rate announcement is to be accompanied by the bank’s rate statement, which contains important insights into current and future economic conditions from the bank’s perspective. The central bank is to hold a press conference to discuss the monetary policy decision after the rate announcement.
The Swiss National Bank is to release data on foreign currency reserves, which gives a valuable insight into the scale of the bank’s currency market operations.
The BoE is to announce its benchmark interest rate.
Also Thursday, the ECB is to announce its benchmark interest rate; the announcement is to be followed by a post-policy meeting press conference with President Mario Draghi.
Germany is to produce official data on factory orders, a leading economic indicator.
Canada is to release official data on building permits, a leading indicator of future construction activity. The country is also to release official data on the trade balance.
The U.S. is to publish the weekly government report on initial jobless claims and official data on the trade balance.
Friday, March 8
Japan is to release official data on the current account and revised data on fourth quarter economic growth.
Switzerland is to produce government data on consumer price inflation, which accounts for the majority of overall inflation.
Elsewhere in Europe, Germany is to release official data on industrial production, a leading economic indicator.
Canada is to publish government data on the change in the number of people employed and the unemployment rate, as well as data on labor productivity.
The U.S. is to round up the week with government data on nonfarm payrolls and the unemployment rate and data on average hourly earnings.
The dollar was broadly higher against the other major currencies on Friday as upbeat U.S. data fuelled expectations for an early end to the Federal Reserve’s easing program, while weak data in the euro zone and U.K. supported safe haven demand.Data on Friday showed that the U.S. manufacturing sector expanded at its fastest pace since June 2011 last month, while a separate report showed that U.S. consumer confidence rose in February.
The Institute for Supply Management said its manufacturing purchasing managers’ index rose to 54.2 from 53.1 in January, while the final reading of the University of Michigan’s consumer sentiment index came in at 77.6, from a preliminary reading of 76.3.
In contrast, revised data showed that manufacturing activity in the euro zone contracted in February at the same pace as in January, with the manufacturing PMI unchanged at 47.8.
The weak data added to speculation over a possible rate cut by the European Central Bank at its upcoming policy meeting on Thursday.
The single currency also remained under pressure amid concerns that that Italy would not be able to continue to implement structural reforms and austerity measures following inconclusive election results.
The euro fell below 1.30 against the dollar for the first time since December 11, with EUR/USD hitting a session low of 1.2967, before settling at 1.3018, down 0.29% for the day and 0.38% lower for the week.
Meanwhile, the pound fell below 1.50 against the dollar for the first time since July 2010 as unexpectedly weak U.K. manufacturing data added to expectations that the Bank of England will resume its quantitative easing program.
The U.K. manufacturing PMI fell to 47.9 from 50.5 in January, well below the 50 level that divides growth from contraction, as employment levels in the sector fell at the fastest pace in more than three years.
GBP/USD hit a session low of 1.4986 before settling at 1.5035, 0.85% lower for the day and down 0.86% for the week.
The dollar rallied more than 1% against the yen on Friday, the largest one-day gain in more than three weeks amid increasing speculation that the Bank of Japan will step up easing measures after Prime Minister Shinzo Abe nominated an advocate of aggressive easing to head the central bank.
USD/JPY hit a session high of 93.69, the highest since February 25, before settling at 93.54, 1.06% higher for the day and up 1.26% for the week.
The dollar also found support amid worries over U.S. spending cuts, known as the sequester, after lawmakers failed to reach an agreement on a deficit reduction plan.
Elsewhere, the Canadian dollar pulled back from multi-month lows against the greenback on Friday after data showed the Canadian economy contracted by 0.2% in December, in line with expectations, indicating that markets had been prepared for weaker-than-forecast data.
The Canadian economy expanded by an annualized 0.6% in the fourth quarter, matching forecasts.
USD/CAD hit a session high of 1.0342, the pair’s highest since June 28, before falling back to settle at 1.0268, 0.38% lower for the day and just 0.09% higher for the week.
In the week ahead, markets will be focusing on interest rate decisions by the ECB, BoE, Reserve Bank of Australia, Bank of Canada and the BoJ.
In addition, Friday’s data on U.S. nonfarm payrolls will be closely watched as investors attempt to gauge the strength of the 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, March 4
Australia is to publish official data on building approvals, a leading indicator of future construction activity, as well as data on company operating profits.
In the euro zone, Spain is to release government data on the change in the number of people unemployed.
The U.K. is to release data on construction sector activity, a leading indicator of economic health.
Tuesday, March 5
The RBA is to announce its benchmark interest rate. The rate announcement is to be accompanied by the bank’s rate statement, which contains important insights into current and future economic conditions from the bank’s perspective.
Australia is also to produce official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. Elsewhere, Japan is to publish government data on average cash earnings.
The euro zone is to release final data on service sector activity, while Span and Italy are to release individual reports. The bloc is also to produce official data on retail sales.
The U.K. is to produce data on service sector activity, a leading economic indicator, as well as industry data on retail sales.
In the U.S., the Institute of Supply Management is to release a report on service sector activity, a leading indicator of economic health.
Wednesday, March 6
Australia is to release official data on fourth quarter economic growth, the broadest indicator of economic activity and the leading measure of the economy's health.
The euro zone is to release revised data on fourth quarter gross domestic product.
The BoC is to announce its benchmark interest rate. The rate announcement is to be accompanied by the bank’s rate statement, which contains important insights into current and future economic conditions from the bank’s perspective. Canada is also to release the Ivey PMI, a leading economic indicator.
The U.S. is to publish data on ADP nonfarm payrolls, which leads government data on nonfarm payrolls by two days. The U.S. is also to release official data on factory orders and crude oil stockpiles.
Thursday, March 7
Australia is to release official data on the trade balance, the difference in value between imports and exports.
The BoJ is to announce its benchmark interest rate. The rate announcement is to be accompanied by the bank’s rate statement, which contains important insights into current and future economic conditions from the bank’s perspective. The central bank is to hold a press conference to discuss the monetary policy decision after the rate announcement.
The Swiss National Bank is to release data on foreign currency reserves, which gives a valuable insight into the scale of the bank’s currency market operations.
The BoE is to announce its benchmark interest rate.
Also Thursday, the ECB is to announce its benchmark interest rate; the announcement is to be followed by a post-policy meeting press conference with President Mario Draghi.
Germany is to produce official data on factory orders, a leading economic indicator.
Canada is to release official data on building permits, a leading indicator of future construction activity. The country is also to release official data on the trade balance.
The U.S. is to publish the weekly government report on initial jobless claims and official data on the trade balance.
Friday, March 8
Japan is to release official data on the current account and revised data on fourth quarter economic growth.
Switzerland is to produce government data on consumer price inflation, which accounts for the majority of overall inflation.
Elsewhere in Europe, Germany is to release official data on industrial production, a leading economic indicator.
Canada is to publish government data on the change in the number of people employed and the unemployment rate, as well as data on labor productivity.
The U.S. is to round up the week with government data on nonfarm payrolls and the unemployment rate and data on average hourly earnings.
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