A report released by Japan’s finance ministry on Friday showed that investors purchased JPY309.9 billion in foreign bonds in the week ending May 4 after purchasing JPY204.4 billion in the previous week.
The data indicated that the Bank of Japan’s massive easing program was pushing investors to seek out higher yields overseas to compensate for lower yields on Japanese government bonds.
USD/JPY hit highs of 101.98 on Friday; the highest level since October 2008, before settling at 101.62, 0.99% higher for the day and extending the week’s gains to 2.21%.
The dollar was also boosted as recent strong U.S. economic data fuelled optimism over an earlier-than-expected end to the Federal Reserve’s quantitative easing program.
Data on Thursday showed that showed that U.S. initial jobless claims fell to the lowest level since January 2008 in the week ending May 4. Earlier this month data showed that the U.S. economy added more jobs than forecast in April, pushing the unemployment rate to a more than four-year low of 7.5%.
The dollar rose to a one-month high against the euro on Friday, withEUR/USD hitting session lows of 1.2936, before settling at 1.2990, 0.40% lower for the day and down 0.64% for the week.
The single currency rose to three-year highs against the yen, withEUR/JPY climbing to highs of 132.26, before settling at 132.01, up 0.58% for the day and gaining 1.60% for the week.
Elsewhere, the Australian dollar briefly dropped below parity against the U.S. dollar on Friday, falling to the lowest level in more than 10-months.
AUD/USD hit session lows of 0.9962, before paring back losses to settle at 1.0021, down 0.69% for the day and ending the week 2.24% lower.
The Aussie came under pressure earlier in the week after the Reserve Bank of Australia cut interest rates to a record low 2.75% and warned that the strength of the Australian dollar was creating a drag on growth.
In the coming week, investors will be awaiting preliminary data from the euro zone and Japan on first quarter economic growth, as well as the ZEW report on German economic sentiment.
The U.S. is to release official data on retail sales, building permits, jobless claims and a closely watched report on consumer sentiment.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, May 13
Australia is to release official data on home loans and private sector data on business confidence.
China is to publish government data on fixed asset investment, industrial production and retail sales.
Switzerland is to produce official data on retail sales.
In the euro zone, Italy is to hold an auction of 10-year government bonds, while the eurogroup of finance ministers are to hold talks in Brussels.
Later in the day, the U.S. is to release official data on retail sales and business inventories.
Tuesday, May 14
New Zealand is to release official data on retail sales. Elsewhere, Australia’s government is to unveil the annual budget statement.
The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health. The euro zone is to release official data on industrial production. Meanwhile, the euro zone’s Economic and Financial Affairs Council is to hold talks in Brussels.
The U.S. is to publish official data on import prices.
Wednesday, May 15
Japan is to release official data on tertiary industry activity. Australia is to publish government data on new vehicle sales and wage price inflation.
The euro zone is to release preliminary data on first quarter gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health. Germany, France and Italy are to release individual data on first quarter growth.
Switzerland is to produce official data on producer price inflation, a leading indicator of consumer inflation, as well as data on ZEW economic expectations.
The U.K. is to release government data on the change in the number of people employed and the unemployment rate, a leading economic indicator.
The Bank of England is to release its quarterly inflation report. BoE Governor Mervyn King is to speak at a press conference following the release of the report.
Canada is to produce official data on manufacturing sales, a leading economic indicator.
The U.S. is to release data on producer price inflation, industrial production, the capacity utilization rate and a report on manufacturing activity in New York State.
Thursday, May 16
Japan is to release preliminary data on first quarter economic growth, the broadest indicator of economic activity and the leading measure of the economy’s health.
New Zealand’s government is to unveil its annual budget statement and the country is also to release data on manufacturing activity.
The euro zone is to produce official data on consumer price inflation,
which accounts for the majority of overall inflation, as well as data on the trade balance. France is to publish preliminary data on nonfarm payrolls.
Canada is to release official data on foreign securities purchases, while the Bank of Canada is to publish its quarterly review.
The U.S. is to produce official data on building permits, the leading indicator of future construction activity as well as data on housing starts. The U.S. is also to release official data on consumer inflation, initial jobless claims and the Philly Fed manufacturing index.
Friday, May 17
New Zealand is to release official data on producer price inflation. Japan is to produce official data on core machinery orders, a leading indicator of production.
Canada is to publish government data on consumer inflation and wholesale sales, a leading indicator of consumer spending.
The U.S. is to round up the week with preliminary data from the University of Michigan on consumer sentiment and inflation expectations.
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