Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

Forex - Weekly Outlook: February 19 - 23

Published 18/02/2018, 11:32
Updated 18/02/2018, 11:42
© Reuters.  Dollar rebounds but still ends week lower

Investing.com - The dollar rebounded from three-year lows against a currency basket on Friday but still ended the week lower as a combination of fears over the perceived erosion of its yield advantage and the outlook for the U.S. fiscal deficit weighed.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.63% to 89.03 in late trade, having earlier sunk to a three year low of 88.15.

For the week, the index was down 1.46%, marking its fifth weekly decline in the past seven weeks.

Expectations for a faster rate of monetary tightening outside the U.S., which would lessen the divergence between the Federal Reserve and other central banks has eroded the dollar’s relative yield attraction for investors.

The greenback has also been hit by concerns that recent tax cuts will negatively impact the U.S. fiscal deficit, which is projected to balloon to near $1 trillion in 2019.

The declines in the dollar came despite expectations for a faster pace of rate hikes by the Fed this year after data on Wednesday showing a stronger-than-expected increase in U.S. inflation in January.

The euro ended the day lower, with EUR/USD last down 0.79% at 1.2405 after hitting its highest level since 2014 at 1.2555 earlier in the day.

The dollar was steady against the yen in late trade, with USD/JPY at 106.19 after hitting a fresh 15-month low of 105.55 earlier.

The Japanese currency has gained around 6% against the dollar so far this year.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

The steep drop in the dollar against the yen in recent sessions has fueled speculation over an intervention by Japanese officials.

Japan’s top government spokesman Yoshihide Suga said on Friday that recent moves in the currency market were one-sided and that the government would take appropriate measures if needed.

Meanwhile, sterling was last down 0.49% at 1.4028 after reaching a weekly high of 1.4144 earlier.

In the week ahead, investors will focus on minutes of the Fed’s latest policy meeting with hopes the central bank will give more hints on the pace of future rate hikes this year.

Staying in the U.S., a report on existing home sales will be the highlight of the holiday-shortened week. Markets stateside will remain closed on Monday for the President's Day holiday.

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

Monday, February 19

Financial markets in China will be closed for the Lunar New Year holiday.

Meanwhile, markets in the U.S. will be closed for the President’s Day holiday.

Tuesday, February 20

Markets in China will remain closed for the Lunar New Year holiday.

The Reserve Bank of Australia is to publish the minutes of its latest policy setting meeting.

The ZEW Institute is to report on German economic sentiment.

Bank of England Governor Mark Carney along with other officials is to testify on inflation and the economic outlook before Parliament's Treasury Committee.

Canada is to publish data on wholesale sales.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Wednesday, February 21

Markets in China will be shut for the Lunar New Year holiday.

Australian is to publish data on construction work done and wage inflation.

The euro zone is to release data on manufacturing and service sector activity.

The UK is to publish its latest employment report.

The U.S. is to produce figures on existing home sales. Later in the day, the Fed is to publish the minutes of its latest policy setting meeting.

Thursday, February 22

The Ifo Institute is to report on German business climate.

The UK is to release revised data on fourth quarter growth along with preliminary data on business investment.

The European Central Bank is to publish the minutes of its latest policy setting meeting.

Canada is to produce data on retail sales.

The U.S. is to publish the weekly report on jobless claims.

Friday, February 23

New Zealand is to publish data on retail sales.

The euro zone is to release revised inflation data.

Canada is to wrap up the week with its monthly inflation report.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.