Currency Trading for July 23-27

EUR/USD

The US dollar surged against the euro on Friday. The euro dropped to $1.2161, down from $1.2272 on Thursday. The common currency is down around 0.7% for the last week. For the euro, this drop is the third weekly decline in a row. The common currency ended trading at its lowest level versus the US dollar since June 2010. Yields on 10-year Spanish bonds climbed to 7.26% on Friday, topping the critical 7% level. The government of Spain also lowered its growth estimates for 2013. The common currency has been trading between $1.215 and $1.233 versus the dollar since July 5.

The euro gained on Monday after the release of weak US retail sales data for June. The country’s retail sales tumbled by 0.5% in the month. The had euro earlier jumped to a fresh weekly high on Tuesday as Spain sold 12-month bills at a yield of 3.918%. However, the common currency declined after Fed Chairman Ben Bernanke's testimony, before picking up later in the day. On Friday, the eurozone finance ministers agreed to lend as much as 100 billion euros to Spain. Here are the major economic events that are likely to affect the currency movements in the coming week.

• On Tuesday, preliminary data on manufacturing sector activity for US will be released.
• On Wednesday, data on US new home sales for June will be released. New home sales climbed 7.6% in May and new home sales are expected to surge to 370,000 in June.

credit: mikecogh

• On Thursday, data on US durable goods orders, pending home sales and weekly initial jobless claims will be released. Initial jobless claims climbed 34,000 to 386,000 in the previous week. Jobless claims are predicted to decline to 380,000 in the latest week.
• On Friday, US data on second quarter GDP, along with the University of Michigan’s data on consumer sentiment will be released.

Euro Economic Data

On Monday, the Eurostat will release data on consumer confidence.                           

On Tuesday, preliminary data on service and manufacturing sector activity for the euro-zone, Germany and France (separately) will be released.

On Wednesday, the German Ifo Institute will release a report on the country’s business climate  which has declined in the previous two months. The index is expected to further decline to 104.8 points.

On Thursday, the Gfk data on German consumer climate will be released. The euro-zone report on M3 money supply will also be released on the same day.

On Friday, German preliminary data on consumer price inflation will be released. Inflation is expected to rise 0.4%. Data on Spanish unemployment will also be released Friday.

GBP/USD

The British pound declined to $1.5619 against the US dollar on Friday, down from $1.5720 on Thursday. The pound traded 0.3% higher for the past week. UK industry data on mortgage approvals will be released on Tuesday. The UK will also report preliminary data on Q2 GDP and data on industrial order expectations on Wednesday.

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AUD/USD

The Australian dollar declined to $1.0382 against the US dollar on Friday, down from $1.0427 on Friday, and up 1.5% versus a week earlier. Australian official data on producer price inflation will be released on Monday. The Reserve Bank of Australia’s Governor Glenn Stevens will speak in Sydneyon Tuesday.

Commodities

Crude oil futures dropped on Friday, after rising for the last seven days. Crude for August delivery fell $1.22 to $91.44 per barrel on the NYMEX. However, the price of oil is still 5% higher for the week. August natural-gas futures gained 2.7% to $3.08 a million British thermal units. Natural gas prices have surged 7.2% for the week. Natural gas futures have gained for two consecutive weeks.

Gold futures gained on Friday, but closed the week 0.6% lower, Gold for August delivery rose $2.40 to $1,582.80 an ounce on the New York Mercantile Exchange. Silver for September delivery gained 0.3% on the NYMEX. However, the metal closed 0.3% lower for the week. Investors will be awaiting weekly data on US petroleum inventories on Wednesday. However, the report on US natural gas stocks will be released on Thursday.