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The dollar
rallied to its highest level against the yen in more than four years on Friday,
rising above 101 after official data showed that Japanese investors increased
their holding of overseas assets.
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, with EUR/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, with EUR/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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