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Forex - Weekly outlook: June 16 - 20

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Investing.com -

Investing.com - The dollar ended Friday's session flat against a basket of other major currencies as escalating tensions in Iraq underpinned safe haven demand for the greenback, offsetting an unexpected decline in U.S. consumer confidence.

Concerns over the ongoing Sunni insurgency in Iraq hit market sentiment on Friday, after insurgents took control of the Iraqi cities Mosul and Tikrit, fuelling fears over the impact of reduced oil supply on global growth.

The escalating violence in Iraq overshadowed a report showing that U.S. consumer sentiment unexpectedly deteriorated in June.

The preliminary reading of the University of Michigan's consumer sentiment index for June came in at 81.2, down from 81.9 in May, missing expectations for an uptick to 83.0.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was flat at 80.75 late Friday.

The dollar was higher against the yen, with USD/JPY up 0.28% to 101.99 late Friday. For the week, the pair was down 0.49%.

The euro edged lower against the dollar, with EUR/USD dipping 0.08% to 1.3541 at the close, not far from the four-month trough of 1.3502 reached on June 5. For the week, the pair lost 0.38%.

The single currency has weakened broadly since the European Central Bank cut rates to record lows earlier this month, in order to combat the threat of persistently low inflation in the euro area.

Elsewhere, the pound ended the week close to five year highs against the dollar after Bank of England Governor Mark Carney said Thursday that U.K. interest rates could rise sooner than investors expect.

GBP/USD was up 0.24% to 1.6968 late Friday, after rising as high as 1.6990 earlier in the session, the most in almost five years. The pair ended the week with gains of 0.99%.

Sterling rose to one-and-a-half year highs against the broadly weaker euro, with EUR/GBP down 0.30% to 0.7981 late Friday, extending the week's losses to 1.32%.

The New Zealand dollar turned lower on Friday amid increased safe haven demand, with NZD/USD slipping 0.26% to 0.8663.

The pair rallied to a one month high of 0.8699 Thursday after the Reserve Bank raised its benchmark interest rate to a five-year high of 3.25% and indicated that borrowing costs would rise again as strong economic growth fuels inflation pressures.

In the week ahead, investors will be focusing on the outcome of Wednesday's Federal Reserve policy meeting, while Monday's preliminary report on euro zone inflation will also be closely watched.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, June 16

The euro zone is to release preliminary data on consumer price inflation, which accounts for the majority of overall inflation.

Canada is to publish a report on foreign securities purchases.

The U.S. is to produce data on industrial production and manufacturing activity in the Empire State.

Tuesday, June 17

The Reserve Bank of Australia is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank's perspective.

Switzerland is to release data on producer price inflation, while the U.K. is to release data on consumer price inflation.

The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.

Later Tuesday, the U.S. is to produce data on housing starts, building permits and consumer prices.

Wednesday, June 18

New Zealand is to release data on the current account, while Australia is to publish an index of leading economic indicators.

The Bank of Japan is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank's perspective. Japan is also to release data on the trade balance.

The BoE is to publish the minutes of its latest policy setting meeting.

The ZEW Institute is to publish a report on economic expectations in Switzerland, a leading indicator of economic health.

Canada is to produce data on wholesale sales.

Later Wednesday, the Federal Reserve is to announce its federal funds rate and publish its rate statement. The announcement is to be followed by a press conference with Fed Chair Janet Yellen.

Thursday, June 19

New Zealand is to publish data on gross domestic product, the broadest indicator of economic activity and the leading measure of the economy's health.

The Swiss National Bank is to announce its libor rate. The bank is also to publish its quarterly monetary policy assessment and hold a press conference.

The U.K. is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.

The Eurogroup of euro area finance ministers are to hold meeting in Brussels.

The U.S. is to publish the weekly report on initial jobless claims as well as a report on manufacturing activity in the Philadelphia region.

Friday, June 20

Germany is to publish data on producer price inflation.

BoJ Governor Haruhiko Kuroda is to speak at an event in Tokyo; his comments will be closely watched.

The euro zone is to release data on the current account, while the euro area's Economic and Financial Affairs Council is to hold meetings in Brussels.

The U.K. is to release data on public sector net borrowing.

Canada is to round up the week with data on consumer inflation and retail sales.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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