Forexpros - The euro rallied to a seven-day high against the
U.S. dollar on Friday, as risk appetite recovered after Federal
Reserve Chairman Ben Bernanke said the bank was prepared to embark
on a third round of easing measures to support the U.S. economic
EUR/USD hit 1.4327 on Thursday, the weekly low; the pair
subsequently consolidated at 1.4498 by close of trade on Friday,
gaining 0.82% over the week.
The pair is likely to find support at 1.4327, Thursday's low and a
four-day low and resistance at 1.4577, the high of July 4.
In a speech at the central bank's annual retreat at Jackson Hole,
Wyoming on Friday, Bernanke said the bank remained ready to conduct
a third bond buying program in order to bolster the faltering U.S.
economy, but stopped short of outlining when and if this may
Bernanke said that the bank's September policy-setting meeting
would run for two days instead of one, in order to "allow a fuller
discussion" of the economic outlook.
The euro had weakened against the greenback in the run-up to
Friday's speech as uncertainty over whether the Fed intended to
implement a third round of quantitative easing weighed.
Also Friday, the Commerce Department said the U.S. economy expanded
more slowly than forecast in the second quarter, as higher fuel
prices, poor weather conditions and disruptions to manufacturing
activity from the March earthquake in Japan weighed.
Gross domestic product rose by 1%, disappointing expectations for
an expansion of 1.1%. The Commerce Department had originally
estimated GDP growth of 1.3% in the second quarter.
Meanwhile, the single currency remained supported against its major
counterparts, despite fears that the region's debt crisis was
deepening as the European Central Bank continued buying Spanish and
Italian government debt, maintaining borrowing costs at sustainable
levels, preventing contagion to core euro zone economies.
Earlier in the week, data showed that manufacturing activity in
Germany and in the 17-nation euro zone didn't slow as much as
initially expected in July.
The euro zone's manufacturing purchasing managers' index fell to
49.7 from 50.4 in July. Economists had forecast a reading of 49.5.
The region's services PMI slipped to 51.5 from 51.6 in July,
holding above forecasts for a reading of 50.7.
Germany's manufacturing PMI remained unchanged at 52.0 in August,
beating forecasts for a decline to 50.8.
In the week ahead, investors will be closely watching Friday's data
on U.S. non-farm payrolls for signs that the nation's economic
recovery is gaining traction.
Also next week, the U.S. Institute of Supply Management is to
publish its index of manufacturing activity for August, while
European Central Bank President Jean-Claude Trichet is to testify
on the region's debt crisis in Brussels.
Ahead of the coming week, Forex Pros has compiled a list of these
and other significant events likely to affect the markets.
Monday, August 29
In the euro zone, Germany is to publish preliminary data on
consumer price inflation, which accounts for a majority of overall
inflation. Later in the day, ECB President Jean-Claude Trichet is
appearing before the European Parliament's Economic Committee in
Brussels, to testify on the region's debt crisis.
Also Monday, the U.S. is to produce industry data on pending home
sales, a leading indicator of health in the housing market. The
nation is also to release official data on personal income and
expenditure and consumer prices.
Tuesday, August 30
The U.S. is to release data on consumer confidence, a leading
indicator of consumer spending, as well as an industry report on
house price inflation. In addition, the Federal Reserve's Open
Market Committee is to publish the minutes of its most recent
policy setting meeting.
Wednesday, August 31
In the euro zone, Germany is to release official data on retail
sales and employment change, leading indicators of economic health.
The single currency bloc is to produce preliminary data on consumer
price inflation and the unemployment rate.
In the U.S., payroll processing firm ADP is to release a report on
non-farm payrolls, which leads government data by two days. The
U.S. is also to publish data on manufacturing activity in the
Chicago area, factory orders and crude oil stockpiles.
Thursday, September 1
The U.S. is to publish its closely watched weekly report on initial
jobless claims, while the ISM is to produce data on manufacturing
Friday, September 2
The U.S. is to round up the week with a government report on
private sector job creation, a key indicator of overall economic
health. The country is also to publish official data on the
unemployment rate and average hourly earnings, an important