Economic calendar: 3 currencies to watch this week
The US dollar held steady last week, even with the weak inflation, employment, and retail sales numbers from the United States. This strength was partly due to the Fed chair, Jerome Powell, who ruled against negative interest rates. The British pound weakened slightly as the market reacted to the third round of Brexit talks. Meanwhile, the New Zealand dollar declined after the interest rate decision by the RBNZ and the brewing tensions between China and NZ. Let us now look at the key currencies to watch this week (May 17 – May 23).
The US dollar
The US dollar has been relatively strong this year. The dollar index, which measures the performance of the USD against a basket of currencies, has risen by more than 4 per cent this year. This is partly because the USD is often viewed as a currency of last resort in times of crisis. As such, in times of crisis, most investors and companies run to its safety.
This week, the dollar will react to Jerome Powell, who will deliver a testimony in congress on Tuesday. In the past, these testimonies tend to move the USD because the chairman talks about the actions the Fed is planning to do. In addition, the greenback will react to the building permits and housing starts data that will be released on Tuesday.
On Wednesday, the Fed will release the minutes of the past meeting and on Thursday, we will get the Philadelphia Fed manufacturing data, existing home sales, and the initial jobless claims data.
The British pound index declined by more than 2 per cent last week as the market worried on Brexit issues. This week, the sterling will likely move because of the same Brexit factors and a slew of economic data from the UK. On Tuesday, we will get the March employment numbers, which will show the initial performance of the UK economy as the coronavirus spread.
The Office of National Statistics (ONS) will release the consumer price index and producer price index on Wednesday while Markit will release the flash manufacturing and service PMI data on Thursday. Finally, the ONS will release the April retail sales on Friday. All these numbers will show how the UK economy has been affected by the coronavirus pandemic.
The euro rose slightly last week as the market participants cheered the reopening of most countries. However, a disappointing GDP data released on Thursday dampened the market. The number showed that the EU economy had its worst contraction to date in the first quarter. This week, participants in the forex market will watch several important numbers and news from the region.
On Tuesday, we will get the ZEW economic sentiment data from Germany and the eurozone. On Wednesday, we will receive the PPI data from Germany and inflation numbers from the eurozone. On Friday, we will get the flash PMI data from the region.
Other currencies to watch
Other notable currencies to watch during the week are the Turkish Lira, Canadian dollar, and the Japanese yen. The lira will react to an interest rate decision by the central bank while the Canadian dollar will react to inflation data and oil prices. Meanwhile, the yen will react to several important numbers like the GDP and the CPI.
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