Forex - Weekly Outlook: July 29 - August 2
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The dollar dropped against the yen on Friday and was trading near six-week lows against the euro as recent U.S. economic data failed to convince market participants that the Federal Reserve will soon begin to taper its stimulus program.
USD/JPY hit session lows of 97.96, the highest since June 27, before settling at 98.30, down 1% for the day and 2.07% lower for the week.
The yen gained ground against the greenback after the release of mixed U.S. data on initial jobless claims and durable goods orders on Thursday.
The Labor Department said the number of individuals filing for initial jobless benefits last week increased by 7,000 to a seasonally adjusted 343,000, compared to expectations for an increase of 6,000 to 340,000.
The Commerce Department said orders for long lasting manufactured goods rose by a seasonally adjusted 4.2% in June, compared to expectations for an increase of 1.3%, while core durable goods orders, which exclude volatile transportation items, were flat in June, compared to expectations for a 0.5% increase.
EUR/USD hit highs of 1.3296 on Friday, before settling at 1.3279, up 0.01% for the day and 0.91% higher for the week.
The dollar found support earlier in the week, after data revealed new U.S. home sales hit a five-year high in June.
The Commerce Department reported earlier U.S. new home sales jumped 8.3% to 497,000 units, their highest level since May 2008.
Analysts were expecting new home sales to rise 1.8% to 482,000, which bolstered the dollar.
The pound was rangebound against the dollar on Friday, with GBP/USD dipping 0.03% to settle at 1.5386, up 0.13% for the week.
On Thursday, the Office of National Statistics said the U.K. economy expanded by 1.4% on a year-over-year basis in the second quarter, in line with expectations. The U.K. economy grew by 0.3% year-on-year in the first quarter.
The U.K. economy expanded 0.6% quarter on quarter, after a 0.3% expansion in the first quarter.
Elsewhere, the Canadian dollar was steady Friday, with USD/CAD easing 0.01% to settle at 1.0278.
Meanwhile, the Australian and New Zealand dollars came under pressure after weak Chinese manufacturing data for July added to fears over a slowdown in the world’s second largest economy, but the kiwi found support as the Reserve Bank of New Zealand left interest rates unchanged.
The preliminary reading of China’s HSBC manufacturing purchasing managers’ index fell to an 11-month low of 47.7 in July, from a final reading of 48.2 last month. Analysts had expected the index to rise to 48.6.
On Thursday, the RBNZ held its benchmark interest rate at 2.50%, in a widely expected move, and said it will keep borrowing costs at a record low this year.
AUD/USD hit session highs of 0.9296, before settling 0.9263, 0.19% higher for the day and up 0.45% for the week.
NZD/USD hit highs of 0.8105 in Friday’s session before trimming gains to close at 0.7931, easing up 0.01% for the day and 1.80% higher for the week.
In the week ahead, the Federal Reserve, the Bank of England and the European Central Bank are to publish their monthly policy statements. Canada and the U.S. are to produce economic growth data and the euro zone is to release data on manufacturing activity.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
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