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Forex - Weekly outlook: June 20-24

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Forex Pros - The euro rose against the U.S. dollar on Friday, amid renewed hopes for a solution to Greece's debt crisis, after German Chancellor Angela Merkel dropped demands that bondholders should share the burden of a new bailout package for Greece.

Following a meeting with French President Nicolas Sarkozy, Merkel said that Germany and France wanted a quick solution to the deadlock over a new aid package for Greece, while Sarkozy said "there was no time to lose."

The announcement revived hopes that an agreement could be reached to stave off the risk of a Greek default.

In Greece, Prime Minister George Papandreou reshuffled his cabinet, naming a new finance minister to help overcome public resistance and push a harsh austerity package into law.

On Wednesday, the single currency suffered it biggest one day fall against the dollar in almost six weeks as the Greek government lost political support amid increasingly violent protests in Athens.

However, risk aversion remained elevated after ratings agency Moody's said late Friday that it was putting Italy's sovereign debt rating under review.

Heightened risk aversion supported traditional safe haven currencies such as the yen and the Swiss franc, while commodity linked currencies turned broadly lower as raw material prices slumped.

Meanwhile, the pound ended the week lower against the dollar, after a recent flurry of disappointing U.K. data reinforced expectations that the Bank of England will hold interest rates at record lows for the rest of this year as the economy struggles to recover.

In the week ahead, European Union finance ministers are to meet in Brussels on Monday, to hold talks on the structure of a new finance package for Greece, but senior officials have warned that a deal will be difficult to achieve by then and a final agreement may take until July.

Also next week, the Federal Reserve is to hold its policy setting meeting, which will be followed by a closely watched press conference by Fed Chairman Ben Bernanke. Investors are hoping that Bernanke will shed some light on the bank's view of the need for further monetary easing.

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

Monday, June 20

The U.K. is to publish a report on house price inflation, a leading indicator of the housing industry's health. Japan is to publish official data on its trade balance, the difference in value between imported and exported goods and services.

In the euro zone, the regions finance ministers are to hold talks in Brussels to continue negotiations on the structure of a new aid package for Greece. Meanwhile, Germany is to publish official data on producer price inflation, a leading indicator of consumer inflation.

Later in the day, Bank of Canada Governor Mark Carney is to speak; his comments will be closely watched for clues to the future possible direction of monetary policy.

Tuesday, June 21

Australia is to publish an index of leading economic indicators, designed to predict the future direction of the economy. Also Tuesday, the Reserve Bank of Australia is to publish the minutes of its most recent policy setting meeting, which give an important insight into the economic conditions that influenced the decision on where to set interest rates.

The U.K. is to publish official data on public borrowing as well as a report on industrial order expectations, a leading indicator of economic health.

In the euro zone, the ZEW Centre for Economic Research is to publish a report on German economic sentiment, a leading indicator of economic health.

In addition, Canada is to publish official data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity. The country is also to publish an index of leading economic indicators. Meanwhile, the U.S. is to release a report on existing home sales, a leading indicator of economic health.

Later in the day, Swiss National Bank Chairman Philipp Hildebrand is to speak in Zurich; his comments will be closely watched for clues to the future possible direction of monetary policy.

Wednesday, June 22

New Zealand is to publish official data on its current account, as well as a report on credit card spending.

In the U.K., the BoE is to publish the minutes of its most recent policy setting meeting, which give an important insight into the economic conditions that influenced the decision on where to set interest rates.

The ZEW Centre for Economic Research is to publish a report on Swiss economic expectations, an important indicator of economic health. Meanwhile, the euro zone is to publish official data on industrial new orders as well as data on consumer confidence.

Later Wednesday, the Federal Reserve is to announce its federal funds rate. The announcement will be followed by a press conference to discuss the bank's rate statement.

Thursday, June 23

Australia is to publish an index of leading economic indicators, designed to predict the future direction of the economy.

Switzerland is to publish a report on its trade balance, the difference in value between imported and exported goods and services.

The euro zone is to release preliminary data on manufacturing and service sector activity, leading indicators of economic health, while Germany and France are also to publish individual reports. Later in the day, European Central Bank President Jean-Claude Trichet is to speak; his comments will be closely watched for clues to the future possible direction of monetary policy.

The U.K. is to publish industry data on mortgage approvals, a leading indicator of housing market demand. The country is also to publish industry data on retail sales, a leading indicator of consumer spending.

Later in the day, the U.S. is to publish government data on initial jobless claims, as well as official data on new home sales, both leading indicators of economic health.

Friday, June 24

In the euro zone, the Ifo Institute for Economic Research is to publish a report on German business climate, a leading indicator of economic health.

In the U.K., BoE Governor Mervyn King is to hold a press conference about the bank's Financial Stability Report in London; his comments will be closely watched.

The U.S. is to round up the week with official data on durable goods orders, a leading indicator of production, as well revised data on first quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy's health.

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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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