Weekly Outlook: 2014, May 11 - 18

Forex Weekly Outlook May 12-16

US Federal Budget Balance, retail sales, inflation and employment data, Philly Fed Manufacturing Index and Prelim UoM Consumer Sentiment are the main events on Forex calendar. Here is an outlook on the highlights of this week.

Last week, Fed Chair Janet Yellen testified before the US Congress repeating her speech made earlier before the Joint Economic Committee. Yellen noted the economy is on track for solid growth and that accommodative policy will continue as long as required. The Fed will normalize interest rates when the economy improves. Yellen believes US balance sheet will return to normal in 5 to 8 years. However, despite the positive tone, there were some troubled spots such as the Russia-Ukraine conflict and the recent setback in the housing market imposing on the ongoing economic recovery. Will the positive note continue in the coming weeks?
Let’s start,

1. US Federal Budget Balance: Monday, 18:00. US budget debt narrowed more than expected in in March, reaching $36.9 billion, following $193.5 billion posted in February. Analysts expected a more modest decline to $76.5 billion. The overall trend is positive with a rise in receipts led by 11% fiscal year-to-date increase in corporate taxes and a 7 percent increase in individual taxes and the spending side is coming down including a 6% decline in defense spending. US Budget Balance is expected to reach a surplus of $112.6 billion.
2. German ZEW Economic Sentiment: Tuesday, 9:00. German investor confidence continued to slide in April reaching 43.2 after posting 46.6 in March. Despite the strong recovery in the first quarter, the six month outlook survey revealed growing concerns about the Russia-Ukraine crisis and its possible effects on manufacturers and exporters in Germany. German investor confidence is expected to continue its downward trend towards 41.3.
3. US retail sales: Tuesday, 12:30. U.S. retail sales surged to a 1-1/2 –year high of 1.1% in March indicating strong recovery in the US economy after a sluggish winter. The increase was evident in all sectors and followed a 0.7% gain in February. Meanwhile Core sales, excluding automobiles edged up 0.7%, the biggest rise in a year. These impressive figures raised new hopes for a boost in growth this year. U.S. retail sales are expected to climb 0.5%, while core sales are expected to increase 0.6%.
4. UK employment data: Wednesday, 8:30. The number people claiming jobless benefits in March declined by 30,400 reaching to 1.14 million after a 37,000 drop in the previous month, indicating an ongoing improvement in Britain’s labor market. The unemployment rate also improved to 6.9% from 7.2% in February. Average earnings in the three months to February increased by 1.7% compared with a year earlier. Chancellor of the Exchequer, George Osborne, hailed the “strong jobs numbers” as further evidence that the coalition government’s economic plan is working. The number of jobless aid seekers are expected to decline further by 31,200 pushing the unemployment rate down to 6.8%.
5. Mark Carney speaks: Wednesday, 9:30. Mark Carney, the Governor of the Bank of England will speak in a press conference, together with other MPC members, about the Inflation Report, in London. Carney stated in March that the Bank’s 2% inflation target became ‘dangerous distraction’ for the UK’s policymakers veiling the true progress made in the UK’s economy. Market volatility is expected.
6. US PPI: Wednesday, 12:30. U.S. producer prices edged up 0.5% in March, posting their largest increase in nine months, amid a rise in the cost of food and trade services. The increase was well above market consensus following a 0.1% fall in February. The unexpected rise may be explained by weather related factors, but the wholesale inflation is expected to settle down in April. U.S. producer prices are expected to climb 0.2% this time.
7. Haruhiko Kuroda speaks: Thursday, 4:25. BOJ Governor Haruhiko Kuroda will speak in Tokyo. Market volatility may occur.
8. US inflation data: Thursday, 12:30. U.S. consumer prices increased slightly more than expected in March, rising 0.2% after a 0.1% climb in the previous month, suggesting inflation is back. In the 12 months through March, consumer prices rose 1.5% after increasing 1.1% over the 12 months through February. Meanwhile, core CPI, excluding volatile energy and food components, also edged up 0.2% in March after rising 0.1% in the prior month. The central bank is expected to end the QE bond purchases later this year. Domestic demand and the labor markets are improving but a rate hike is not expected before the second half of 2015. U.S. consumer prices are expected to increase by 0.3%, while core CPI is predicted to climb 0.2%.
9. US Unemployment Claims: Thursday, 12:30. The number of new claims for unemployment aid filed last week fell 26,000 to 319,000, indicating the setback seen in the Easter holiday was temporary and the US job market is regaining its strength. Despite the drop in the number of applications. The four-week average increased by 4,500, to a seasonally adjusted 324,750 due to temporary layoffs around the Easter holiday but it is far better than the 343,000 average for 2013. Jobless claims is expected to rise to 321,000.
10. US Philly Fed Manufacturing Index: Thursday, 14:00. Factory activity in the U.S. mid-Atlantic region increased in April to 16.6 from 9.0 in March beating market forecast of a 9.6 reading. New orders edged up to 14.8, the highest level since October, from 5.7. The employment component improved to 6.9 from 1.7, but business conditions for the next six months fell to 26.6 from 35.4. Overall, the survey shows positive growth prospects for the US economy in the coming months. Factory activity in the Philadelphia area is anticipated to decline to13.9.
11. Janet Yellen speaks: Thursday, 23:00. Federal Reserve Chair Janet Yellen will speak in Washington DC at the National Small Business Week. Yellen may talk about her latest testimony at the US congress. Market volatility is expected.
12. US Building Permits: Friday, 12:30. US building permits fell by 2.4% in March reaching an annualized rate of 990,000.The reading suggests the pace of starts will increase further in the coming months. Single-family starts increased 0.2% compared to the previous year. Economists expect an acceleration in housing construction based on stronger household construction later this year and in 2015. US building permits are expected expand to an annualized rate of 1.01 million.
13. US Prelim UoM Consumer Sentiment: Friday, 13:55. Consumer confidence strengthened in April to the highest level since July, rising to 82.6 compared to 80 in March. Improvement in the US labor market contributed to this rise. The reading was better than the 81.2 projected by analysts. Increased employment opportunities and better wages will continue to lift consumer spending as well as consumer sentiment. Consumer confidence is expected to improve further to 84.7.

US Dollar Stands to Gain on Rate Forecast, Surge on Risk Trends

Fundamental Forecast for Dollar: Neutral

• A dense round of event risk in the week ahead reaches its pinnacle with CPI – the only indicator that can truly trigger a Fed hike
• Risk trends will remain a constant threat/opportunity, but change interest rate tables will be a more likely dollar driver

Attachment 6881

Having started out the period with a painful collapse, the US dollar ended this past week with a strong rally that brought it back to even. A substantial level of technical support for the greenback – both with the USDollar Index and individual pairs like EURUSD – was tested and held. Concerns of a deeper bearish current for the dollar have been curbed by a steadfast path in Fed rate expectations, a strong relative pace of growth and even the lingering fears of a capital market unwind. However, these elements have reinforced stability. To put the currency back on a bullish track, we need a motivating driver…or the collapse of its counterparts.

Heading into the new trading week, the most capable and promising driver for the benchmark currency is interest rate speculation. What has been a meaningful driver over the past months, has seen a surprising moderation of its influence just over the last two weeks. A FOMC meeting that reinforced an optimistic (hawkish) outlook despite the shockingly weak 1Q GDP reading and April’s exceptionally strong jobs report leveraged little strength from yields and the dollar.

The recent retreat in 2-year Treasury yields and slip from the 1Y2Y forward swap – good gauges for timing the first rate hike from the Fed – have contributed to the currency’s struggle. Yet, the pullback in yield has followed more a path of moderation than a general reversal in course. If the central bank remains optimistic on growth and plans to end the QE3 program by October (said outright by Dallas Fed President Fisher and insinuated in Chair Yellen’s ‘by fall’ remarks), the path to tightening is not likely to be much further behind. The consensus remains mid-2015 which would put the Fed ahead of the ECB, BoJ, BoC and perhaps even the RBA.

Maintaining optimism over the economic forecast will be key to strengthening the rate outlook, but a hike will only be possible when the specter of inflation arises. And, if the Dollar is to compete against the likes of the Pound or the Australian Dollar, that projection for the first hike and subsequent moves will require a timelier swell in price pressures than the market is currently accounting for. This week’s top US docket theme will be inflation as we take in April readings for import, producer and consumer price gauges. The CPI reading on Thursday will hold particular sway over rate speculation with a forecasted jump in the headline figure to a 2.0 percent annual pace – the Fed’s target.

Another aspect of the ‘relative’ monetary policy influence in the FX market is the bearings and influence of dollar’s counterparts. The EURUSD plunged in the second half of this past week after the ECB threatened a fresh round of accommodation (rate cut or new stimulus), and the greenback reveled in the Euro’s fading yield forecast. The weakness of the dollar’s counterparts could prove even more effective than its own advance. As such, we should keep an eye on the BoE’s Quarterly Inflation Report and the Eurozone 1Q GDP data due this week.

Finally, we should always keep in mind the theme that has struggled for traction but carries the greatest potential should it take: risk trends. Market participants in all asset classes and from bearish to bullish have show increased concern about the value of current market levels (see the weekend Strategy Video on Bubbles here). If fear started to spread, the underlying conditions of record leverage, over-subscription to risky assets and virtually no hedge would set a terrible blaze in financial markets. A quick escalation to deleveraging and panic leads to repatriation and demand for the traditional ‘all-out’ safe havens: dollar and Treasuries.

Japanese Yen Remains a Sell Until this Changes

Fundamental Forecast for Japanese Yen: Bearish

• Why is forex volatility so low, and why does it affect the Yen?
• Technical forecasts for the USDJPY point to sideways moves

Attachment 6882

The Japanese Yen trades at critical resistance versus the US Dollar (USDJPY trades at support). Given extremely low volatility expectations it seems unlikely we see a major USDJPY breakdown, but any major surprises out of upcoming Japanese data could force sharp currency swings.

FX traders sent 1-month volatility prices on USDJPY derivatives to their lowest levels on record, and it’s obvious that very few expect to see big things through the foreseeable future. Our forex technical forecasts as well as sentiment-based outlook subsequently favor a USDJPY bounce off of the lows. Yet expectations often beget disappointment; what could force a major Japanese Yen breakout?

Top economic event risk comes from Japan’s Q1 GDP Growth numbers due Wednesday night/Thursday morning, and any surprises could shake the currency from its tight trading range. Consensus forecasts call for a substantial 4.2 percent annualized rate of economic growth in the first quarter. Such lofty expectations arguably leave risks to the downside for the data itself and the Japanese currency. But why is the JPY stuck in such miniscule trading ranges across the board?

Put simply, forex volatility is near record-lows as risky asset classes continue to outperform. Yen volatility may trade to further lows if the US S&P 500 and Japanese Nikkei 225 continue to trade onto fresh peaks.

In that sense it will be important to watch how Japanese equities respond to key economic data; any Nikkei 225 losses might actually result in Yen strength (USDJPY weakness) regardless of the economic implications of the news results.

The absence of any major surprises in upcoming event risk would likely leave the status quo intact. It’s important to note that the Yen has historically fallen in times of low volatility, and indeed we would argue that a further compression in vols should keep the USDJPY above key support. The risk is that material disappointments in data could force equity market tumbles and, by extension, a USDJPY breakdown.

Gold Prices Vulnerable as USD Regains Footing- All Eyes on US CPI

Fundamental Forecast for Gold: Neutral

• Gold Churns on Near Term Fibonacci Retracement
• Gold Exposed To Easing Ukrainian Concerns, Crude Oil Cracks $100

Attachment 6883

Gold prices are softer for the second consecutive week with the precious metal off by nearly 1% to trade at $1287 ahead of the New York close on Friday. The losses come on the back of a broad-based USD rally that saw the Dow Jones FXCM USDOLLAR index reverse off fresh 6-month lows, paring the entire April decline by the end of the week. The index is now virtually unchanged since the monthly open and traders will be looking ahead to next week’s docket as the US data front picks back up.

The calendar was light for the US this week with gold prices giving up early gains after Fed Chair Janet Yellen noted in her testimony before congress that the central bank’s accommodative stance was warranted given the relative strength of the labor markets and subdued inflation metrics. The greenback regained its footing with a rather dovish ECB President Mario Draghi on Thursday further supporting the dollar rebound. The subsequent rally has continued to weigh on gold prices which look to close the week just off the low.

Looking ahead to next week, US data will be back in focus on the heels of this week’s Yellen testimony with Retail Sales, the Consumer Price Index (CPI) and Industrial Production on tap. Inflation figures on Thursday may prove pivotal for bullion with consensus estimates calling for a slight increase in the y/y and m/m prints with core CPI expected to fall to 0.1% from 0.2% m/m and hold at 1.7% y/y. Should the data show a faster-than-expected pace of price growth, look for gold prices to come under pressure as expectations for a 2015 Fed rate-hike take root.

From a technical standpoint, gold completed a 100% Fibonacci extension off the April lows with this week’s push into the $1310 barrier. The subsequent reversal has continued to be supported by the 100-day moving average, currently around $1287 and a break below this level puts back into focus key support at $1260/70 (bullish invalidation). That said, we cannot discount another assault on the highs as we continue to hold within the initial May opening range with a breach above $1310 suggesting that a more significant low may have been put in last month. Such a scenario looks back to a region defined by last month’s high and the 50% retracement of the March sell-off at $1327/34. With the current positioning and key US inflation data on tap next week, we will maintain a neutral stance into the open with the Sunday/Monday opening range likely to offer further clarity on a near-term directional bias.

Nikkei forecast for the week of May 12, 2014, get technical Analysis

The Nikkei as you can see fell during most of the week, but the ¥14,000 level offered enough support to turn things background inform a hammer. We believe that this area should offer quite a bit of support, so a break above the top of the hammer which is at the ¥14,500 level, that would in fact be a signal to start buying as we should head to ¥15,250 level. Above there, we would more than likely head to the recent highs again. Going forward, we fully expect this market to have buyers.


http://youtu.be/_DsmNow6NjA


Attachment 6884

DAX forecast for the week of May 12, 2014, Technical Analysis

The DAX initially fell during the week, but found enough support at the €9400 level to turn things back around and form a nice-looking hammer. This hammer sits below the €9700 level, which is an area we need to see cleared in order to start going long again. We believe that a breakout above the €9800 level does all but completely guarantee a move to €10,000, and we do ultimately believe that this breakout will happen. Because of this, we have no interest in selling this market as we see a significant amount of support all the way down to the €9000 handle.

http://youtu.be/kxr8VYJCnVc


Attachment 6885

NASDAQ forecast for the week of May 12, 2014, Technical Analysis

NASDAQ as you can see had a back-and-forth week, but continues to respect the 4000 level as support. Because of this, we believe that ultimately this market will probably go higher, but recognize that there is a significant amount of resistance just above as well, with that being the theme of the last month. Because of this, we think that this market will continue to sideways, but ultimately will breakout to the upside in a move above the 4200 level should begin the next leg higher, which could be much higher.


http://youtu.be/oY7n6sammMA


Attachment 6886

MIB forecast for the week of May 12, 2014, Technical Analysis

The MIB fell during the bulk of the week, but found the 21,200 level to be supportive enough. That being the case, we feel that the market should continue to find buyers below, and therefore even if we don’t pick up right away, we believe that the market will bounce from this general vicinity. With that being the case, we are in “buy only” mode at the moment, but at the end of the day it is simply an uptrend that we have been following and the truth is we may go sideways in the meantime. However, we do believe that the 22,200 level will be broken above, and the uptrend will continue.

http://youtu.be/xihhm7d1ChM


Attachment 6887

IBEX forecast for the week of May 12, 2014, get technical Analysis

The IBEX went back and forth during the course of the week, testing the €10,600 level above for resistance and finding it there. With that, the market looks like it’s still once to go higher though, but we may have to hang out in this general vicinity. If you notice, several months have gone by where we have basically been grinding higher, and that’s what this looks like to us, grinding. There is an upward bias though, so the only thing you can do in this market is by and at this point.

http://youtu.be/TxHM9juddSo


Attachment 6888

CAC forecast for the week of May 12, 2014, Technical Analysis

The Parisian index went back and forth during the course of the week, testing the €4400 level for support, while testing the €4500 level as resistance. With that, it appears that the market is trying to breakout above the top of the two shooting stars from the previous weeks. That being the case, and the fact that the market ended up forming a bit of a hammer, we believe that will see a massive breakout above the €4500 level, and as a result the market will then head to the €5000 level. Selling is not an option.

http://youtu.be/CARswilLj9A


Attachment 6889

S&P 500 forecast for the week of May 12, 2014, Technical Analysis

The S&P 500 as you can see initially fell during the week, and then bounced off of the 1860 level. That being the case, it appears that the market has formed a hammer for the week, but now it is obvious more than ever that the 1900 level needs to be overcome in order to start going long on a longer-term basis. We believe that will ultimately happen, so therefore on a move above that level we would not hesitate to get involved. Pullbacks all the way to the 1820 level should be supportive as well, as we see plenty of support between here and there.

http://youtu.be/xbIXpBNwZxg


Attachment 6890

FTSE forecast for the week of May 12, 2014, Technical Analysis

FTSE as you can see initially fell during the week, but did bounce enough in order to form a hammer. The hammer is at the top of the current consolidation area, so we feel that a move above the 6850 level of course is a sign that we will go higher. In fact, we think that the market could go much higher, probably heading to 7000 in the short term. Nonetheless, even if we fall from here, there should be plenty of support all the way down to the 6500 level, making this a “buy only” market.

http://youtu.be/gYvNwaf_mto


Attachment 6891

Dow Jones 30 forecast for the week of May 12, 2014, Technical Analysis

The Dow Jones 30 as you can see initially fell during the week, but found the 16,400 level to be supportive enough to turn things back around. Ultimately, the market ended up closing with a slightly positive candle, and with that the week ended up running a hammer that is pressing up against the 16,600 resistance level. With that in mind, we are buyers on a break above the highs from the week as it should signal a breakout to the upside in a continuation of the longer-term uptrend.


http://youtu.be/AEuuwSVbC1s


Attachment 6892

US Dollar Index forecast for the week of May 12, 2014, Technical Analysis

The US Dollar Index fell during the bulk of the week, but found enough support down at 79 to turn things back around and form a massive hammer. Because of this, we believe that a break above the 80 handle is in fact a longer-term buy signal, as this area has been so reliable over the longer term. On the other hand, if we broke down below the bottom of the hammer from the past week, that would be a very bearish sign. That of course would have this market really kind of coming undone, probably heading to the 75 level.

On the upside, we could hit the 81.25 level without too many issues. Above there, we could head to 82, 83, and then possibly as high as the 85 level. It really comes down to what the Federal Reserve is going to do, and we have recently heard that they are going to back off of quantitative easing, which of course has been bringing down the value of the Dollar.

Keep an eye on the Federal Reserve and its statements, but the latest one was a little bit of a mixed bag in the sense that we did hear that they are pulling back quantitative easing little bit, but at the same time suggests that perhaps there are some cracks in the economy yet again. Before going forward, we also have to pay attention to other currencies such as the Euro, which of course has been under significant pressure due to the fact that the European Central Bank is likely to do something in June if the market does in correct the pricing of that particular currency against the US dollar. Remember, the Euro is worth 40% of this contract, said that by itself almost ensures that we will probably go higher at this point. On top of that, the Yen is probably going to be on the back foot soon as well, as the Bank of Japan is likely to continue to jawbone that particular currency down. Between the two currencies, that is enough to move this market.


http://youtu.be/jMV1JPKhR14


Attachment 6893

Silver forecast for the week of May 12, 2014, Technical Analysis

The silver markets fell during the bulk of the week, but still remain within the support area that we have been testing for some time. If we can break above the $20 level, we feel that this market should continue to go higher, probably aiming for the $22 handle. On the other hand, if we close on a daily candle below the $19 level, we feel that this market could start to come undone at that point and probably aim to reach the $15 level as that’s the next massive support area.

http://youtu.be/Hg3fz_B1GJc


Attachment 6894

Gold forecast for the week of May 12, 2014, Technical Analysis

Gold markets initially tried to rally during the week, but found far too much in the way of resistance above the $1300 level to continue that move. That being the case, we ended up falling enough to form a shooting star but there are two hammers just before this candle as well, leading us to believe that we are probably getting ready to grind sideways. With that being the case, we think that ultimately this market will probably go higher, and a break of the top of the shooting star from this past week would be a buying opportunity. We suspect that the “floor” in this market is at the $1200 level.

http://youtu.be/kJppyYQhlMM


Attachment 6895

USD/JPY forecast for the week of May 12, 2014, Technical Analysis

The USD/JPY pair fell during the bulk of the week, but as you can see the trend line has held up as support. Because of this, we feel that this market continues to go higher, but recognize that it would be difficult to get to the 103 level initially. However, if we break above the 103 level, we are buyers as well, as it would send this market looking for the 105 level which is our longer-term target. As far selling is concerned, if we get below the 101 level, we feel that the 100 level will be targeted first, and then ultimately the 97 level.


http://youtu.be/RWppMRyHnm4


Attachment 6896

USD/CAD forecast for the week of May 12, 2014, Technical Analysis

The USD/CAD pair fell during most of the week, but as you can see bounced enough to form a hammer overall. The 1.09 level was a level that needed to hold by the end of the week, and that’s essentially where we have closed. Because of this, it still very likely that we will bounce, and a move above the 1.10 level has the market looking for the 1.1250 handle over the course of the next several weeks. On the other hand, there is the possibility that we break down, but the downside seems to be somewhat limited in our opinion.


http://youtu.be/Uxf-KoQSwZE


Attachment 6897

NZD/USD forecast for the week of May 12, 2014, Technical Analysis

The NZD/USD pair tried to rally over the course of the week, but as you can see struggle that the 88 level. The market fell back down and formed a shooting star, which of course is very bearish. Nonetheless, it appears that we are still within consolidation, and we feel that the “floor” in this market is at the 0.85 handle, so thereby making this a market that’s probably not can it be able to be traded from a longer-term perspective quite yet. However, we would be buyers near 0.85 off of the daily chart and supportive action.

http://youtu.be/L_iM93Kysqg


Attachment 6898

GBP/USD forecast for the week of May 12, 2014, Technical Analysis

The GBP/USD pair initially tried to rally during the week, but as you can see the 1.70 level of course did offer the resistance and we anticipated seen. With that, it appears that the market found a lot of sellers in that general vicinity, turning the market completely around and forming a massive shooting star by the end of the week. The target has been hit with that we have been talking about for some time, so quite frankly we are flat of this market at the moment. However, we still believe that the buyers will take control the market again. However, it might take a minute.

The shooting star doesn’t have us selling, rather it has us looking for some type of buying opportunity lower as we pull back from lofty levels. That being the case, the reality is that the buyers will be very interested in going long as lower levels.

The 1.65 level is massively supportive obviously, and therefore any move down to that level would be very interesting for us as it would provide a longer-term buying opportunity. However, the 1.67 level could also be an area where we find buyers. On the other hand, if we break the top of the shooting star, that’s a very bullish move, and we would be very bullish of the British pound at that point time as it should send the market to the 1.75 handle first, and probably much higher than that.

We also see a taut of support just below the 1.65 handle, so we think that is essentially the “floor” in this marketplace. If we managed to break down below the 1.64 handle, at that point time we could very easily see this market turned around and perhaps have a trend change again. That is without a doubt the least likely scenario, but it is a possibility that we have to keep in mind. Ultimately though, we do have a longer-term target 1.75, and possibly 1.80 by the end of the year given the right conditions.


http://youtu.be/4krN_NHVe6I


Attachment 6899

EUR/USD forecast for the week of May 12, 2014, Technical Analysis

The EUR/USD pair initially tried to rally to the 1.40 level, but as you can see turned everything back around and form a nasty looking resistive candle. The shape of the candle is somewhat like a shooting star, and as result it looks as if the market is ready to continue falling from here. The 1.37 level will be supportive, but we believe that the closing of the week at such lows in the range means that we will see continued bearish pressure, and as a result we aren’t looking to buy at all now.


http://youtu.be/hKBY96iRwTg


Attachment 6900

Forex - Weekly outlook: May 12 - 16

The euro fell to one-month lows against the dollar on Friday, extending steep losses from the previous session after the European Central Bank indicated that it could ease monetary policy as soon as next month.

EUR/USD ended Friday’s session at 1.3756, the weakest level since April 8, down 0.60% on the day. For the week, the pair was off 0.85%.

The euro fell from two-and-a-half year highs against the dollar on Thursday after ECB President Mario Draghi said the banks is “comfortable” with acting to shore up growth and stop inflation from falling too low at its next meeting in June. The comments came after the ECB left rates on hold, as expected.

Draghi also said the strength of the euro was “a serious concern” and added that the bank would be closely monitoring exchange rate developments.

The single currency came under additional pressure after data on Friday showed that German exports fell 1.8% from a month earlier in March and the country posted a smaller-than-forecast trade surplus.

The euro dropped to two-month lows against the yen, with EUR/JPY at 140.09 late Friday, the weakest since March 4. The pair ended the week down 1.15%.

Elsewhere Friday, the dollar gained ground against the yen and the Swiss franc on Friday. USD/JPY was at 101.85 late Friday, holding above the three-week trough of 101.42 reached on Tuesday. For the week, the pair was down 0.27%.

USD/CHF settled at a one-month high of 0.8862, 0.62% higher for the day and extending the week’s gains to 0.95%.

Sterling was also lower against the dollar, with GBP/USD down 0.48% to 1.6849 at the close. Earlier in the week, the pair touched highs of 1.6994, the most since August 2009 on the back of expectations that the Bank of England will raise interest rates ahead of other central banks.

The Canadian dollar fell back from a four-month high against the U.S. dollar on Friday, following an unexpectedly weak domestic jobs report. Statistics Canada reported that the economy shed 28,900 jobs in April, confounding expectations for jobs growth of 12,000.

USD/CAD rose 0.62% to 1.0897 at the close, after falling as low as 1.0813 in the previous session.

In the week ahead, investors will be looking ahead to the BoE’s quarterly inflation report for further indications of the expected course of monetary policy. The euro zone and Japan are to release preliminary data on first quarter economic growth, while the U.S. is to publish reports on retail sales, consumer prices and 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 12

• Japan is to release data on its current account. Australia is to publish private sector data on business confidence.
• In Europe, Switzerland is to produce data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
• Later Monday, the U.S. is to publish data on the federal budget balance.

Tuesday, May 13

• Australia is to produce data on house price inflation and home loans, while the government is to release its annual budget report.
• China is to release data on industrial production and fixed asset investment.
• The U.K. is to release private sector data on retail sales.
• The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.
• The U.S. is to produce data on retail sales, as well as reports on import prices and business inventories.

Wednesday, May 14

• The Reserve Bank of New Zealand is to publish its bi-annual financial stability report. Governor Graeme Wheeler is to hold a press conference to discuss the report. Meanwhile New Zealand is to release data on retail sales.
• The U.K. is to release official data on the change in the number of people unemployed and the unemployment rate and average earnings. The BoE is to publish its quarterly inflation report, and Governor Mark Carney is to hold a press conference to discuss the report.
• The ZEW Institute is to publish a report on economic expectations in Switzerland, a leading indicator of economic health.
• The euro zone is to produce data on industrial production.
• Later Wednesday, the U.S. is to release data on producer price inflation.

Thursday, May 15

• Japan is to publish preliminary data on first quarter gross domestic product, the broadest indicator of economic activity and the leading indicator of economic growth. The nation is also to release a report on tertiary industry activity.
• Bank of Japan Governor Haruhiko Kuroda is to speak at an event in Tokyo; his comments will be closely watched.
• New Zealand is to release its annual budget statement, as well as private sector data on manufacturing activity.
• The euro zone is to publish preliminary data on first quarter GDP, as well as revised data on consumer inflation.
• Switzerland is to publish data on producer price inflation.
• Canada is to release a report on manufacturing sales.
• The U.S. is to release data on initial jobless claims, consumer inflation and industrial production, as well as a report on manufacturing activity in the Philadelphia region.

Friday, May 16

• Canada is to publish data on foreign securities purchases.
• The U.S. is to round up the week with reports on building permits and housing starts, and a preliminary reading on consumer sentiment from the University of Michigan.

USD/JPY weekly outlook: May 12 - 16

The dollar pushed higher against the yen on Friday, but was still close to a three-week low struck earlier in the week, as concerns over the crisis in Ukraine continued to underpin safe haven demand.

USD/JPY was at 101.85 late Friday, holding above the three-week trough of 101.42 reached on Tuesday. For the week, the pair was down 0.27%.

The pair is likely to find support at 101.42 and resistance at 102.25, the high of May 5.

Investors remained cautious ahead of a weekend referendum by pro-Russian separatists in Ukraine's two eastern regions, which has been condemned by Ukraine’s government and the West.

The dollar fell to the weakest level since mid-April against the yen earlier in the week following dovish comments by Fed Chair Janet Yellen, who said a high degree of monetary accommodation remains warranted given the slack in the U.S. economy.

The comments came during testimony to the Joint Economic Committee of Congress.

Elsewhere Friday, the yen rose to two-month highs against the broadly weaker euro, with EUR/JPY at 140.09 late Friday, the weakest since March 4. The pair ended the week down 1.15%.

The drop in the euro came after ECB President Mario Draghi said Thursday the bank is “comfortable” with acting to shore up growth and stop inflation from falling too low at its next meeting in June.

The ECB left rates on hold on Thursday, as expected.

Draghi also said the strength of the euro was “a serious concern” and added that the bank would be closely monitoring exchange rate developments.

The single currency came under additional pressure after data on Friday showed that German exports fell 1.8% from a month earlier in March and the country posted a smaller-than-forecast trade surplus.

In the week ahead, investors will be looking ahead to preliminary data on first quarter economic growth from Japan, while the U.S. is to publish reports on retail sales, consumer prices and 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 12

• Japan is to release data on its current account.
• Later Monday, the U.S. is to publish data on the federal budget balance.

Tuesday, May 13

• The U.S. is to produce data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity, as well as reports on import prices and business inventories.

Wednesday, May 14

• The U.S. is to release data on producer price inflation.

Thursday, May 15

• Japan is to publish preliminary data on first quarter gross domestic product, the broadest indicator of economic activity and the leading indicator of economic growth. The nation is also to release a report on tertiary industry activity.
• The U.S. is to release data on initial jobless claims, consumer inflation and industrial production, as well as a report on manufacturing activity in the Philadelphia region.

Friday, May 16

• The U.S. is to round up the week with reports on building permits and housing starts, and a preliminary reading on consumer sentiment from the University of Michigan.

USD/CHF weekly outlook: May 12 - 16

The dollar rose to a one-month high against the Swiss franc on Friday, recovering from lows hit earlier in the week in the wake of dovish comments by Federal Reserve Chair Janet Yellen.

USD/CHF ended Friday’s session at 0.8862, 0.62% higher for the day and extending the week’s gains to 0.95%.

The pair was likely to find support at 0.8740 and resistance at 0.8925.

The dollar gained ground as concerns over the crisis in Ukraine eased but investors remained cautious ahead of a weekend referendum by pro-Russian separatists in Ukraine's two eastern regions, which has been condemned by Ukraine’s government and the West.

The dollar fell to the weakest level since early April against the Swissy earlier in the week after Fed Chair Janet Yellen said a high degree of monetary accommodation remains warranted given the slack in the U.S. economy.

The comments came during testimony to the Joint Economic Committee of Congress.

Elsewhere, the Swiss National Bank said Wednesday that its foreign currency reserves rose in April.

The Swiss central bank said it held 438.949 billion Swiss francs in foreign currency at the end of April, up from 437.935 billion in March, indicating that it has not been actively buying euros to defend its 1.20 Swiss francs per euro minimum exchange rate floor.

The SNB imposed the exchange rate floor in September 2011 to help stave off the risk of deflation and recession, as safe haven inflows prompted by the crisis in the euro zone pushed the Swiss franc close to parity with the euro.

The Swissy was little changed against the euro on Friday, with EUR/CHF settling at 1.2193.

The euro ended the week sharply lower against some of the other major currencies after European Central Bank President Mario Draghi said Thursday the bank is “comfortable” with acting to shore up growth and stop inflation from falling too low at its next meeting in June.

The ECB left rates on hold on Thursday, as expected.

In the week ahead, investors will be looking ahead to the U.S. reports on retail sales, consumer prices and 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 12

• Switzerland is to produce data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
• Later Monday, the U.S. is to publish data on the federal budget balance.

Tuesday, May 13

• The U.S. is to produce data on retail sales, as well as reports on import prices and business inventories.

Wednesday, May 14

• The ZEW Institute is to publish a report on economic expectations in Switzerland, a leading indicator of economic health.
• Later Wednesday, the U.S. is to release data on producer price inflation.

Thursday, May 15

• Switzerland is to publish data on producer price inflation.
• The U.S. is to release data on initial jobless claims, consumer inflation and industrial production, as well as a report on manufacturing activity in the Philadelphia region.

Friday, May 16

• The U.S. is to round up the week with reports on building permits and housing starts, and a preliminary reading on consumer sentiment from the University of Michigan.

USD/CAD weekly outlook: May 12 - 16

The U.S. dollar strengthened against the Canadian dollar on Friday, rebounding from four-month lows after data showed that the Canadian economy unexpectedly shed jobs in April.

USD/CAD was at 1.0897 late Friday, up 0.62% for the day, after falling as low as 1.0813 in the previous session. For the week, the pair was still down 0.55%.

The pair was likely to find support at 1.0813 and resistance at 1.0960.

The Canadian dollar weakened after Statistics Canada reported that the economy shed 28,900 jobs in April, confounding expectations for jobs growth of 12,000.

The unemployment rate remained unchanged at 6.9%, in line with expectations but the labor force participation rate, which measures those still actively looking for work, ticked down to 66.1% in April from 66.2% the previous month.

The decline in employment was the largest since December 2013.

The weak data added to concerns over the prospect of weaker-than-expected economic growth in the second quarter and underline expectations that the Bank of Canada will keep rates on hold for longer.

The U.S. dollar weakened against the other major currencies earlier in the week after Federal Reserve Chair Janet Yellen struck a dovish tone on the economy during testimony to the Joint Economic Committee of Congress on Wednesday.

Ms. Yellen said that a high degree of monetary accommodation remains warranted given the slack in the economy.

The Fed chief also said the bank expects economic growth to accelerate this year despite the slowdown in the first quarter but warned that the recent housing market slowdown "could prove more protracted than currently expected."

In the week ahead, the data calendar for Canada is light so investors will be looking ahead to U.S. reports on retail sales, consumer prices and 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 12

• The U.S. is to publish data on the federal budget balance.

Tuesday, May 13

• The U.S. is to produce data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity, as well as reports on import prices and business inventories.

Wednesday, May 14

• The U.S. is to release data on producer price inflation.

Thursday, May 15

• Canada is to release a report on manufacturing sales.
• The U.S. is to release data on initial jobless claims, consumer inflation and industrial production, as well as a report on manufacturing activity in the Philadelphia region.

Friday, May 16

• Canada is to publish data on foreign securities purchases.
• The U.S. is to round up the week with reports on building permits and housing starts, and a preliminary reading on consumer sentiment from the University of Michigan.

AUD/USD weekly outlook: May 12 - 16

The Australian dollar eased off a three-week high struck in the previous session against its U.S. counterpart on Friday, after the Reserve Bank of Australia reiterated that interest rates will remain at record lows for the foreseeable future.

AUD/USD hit 0.9393 on Thursday, the pair’s highest since April 15, before subsequently consolidating at 0.9363 by close of trade on Friday, down 0.12% for the day but 0.91% higher for the week.

The pair is likely to find support at 0.9269, the low from May 6 and resistance at 0.9393, the high from May 8.

In its statement of monetary policy published Friday, the RBA changed its growth and inflation forecasts despite a higher exchange rate, and said monetary policy will remain accommodative for an extended period.

The inflation outlook suggests there is still space capacity in the economy and "given that assessment, the board's view is that the current accommodative monetary policy setting is likely to be appropriate for some time yet," the RBA said.

The central bank upgraded the outlook for the near term, forecasting annualized growth of 3.0% in June, compared with 2.75% in the February statement.

But in the case of inflation, the RBA lowered its near-term projection to a 2.75% gain year-on-year for underlying inflation from 3.00% in the February statement.

The Aussie rallied to a three-week high on Thursday after official data showed that the number of employed people in Australia rose by 14,200 in April, beating expectations for a 6,800 increase. March's figure was revised up to a 22,000 rise from a previously estimated 18,100 gain.

The report also showed that Australia's unemployment rate remained unchanged at 5.8% last month, compared to expectations for an uptick to 5.9%.

On Tuesday, the RBA held the cash rate at a record low 2.5% as widely expected in its latest board review.

Meanwhile, the greenback remained under pressure after Federal Reserve Chair Janet Yellen said Wednesday that a high degree of monetary accommodation remains warranted given the slack in the economy.

Data from the Commodities Futures Trading Commission released Friday showed that speculators decreased their bullish bets on the Australian dollar in the week ending May 6.

Net longs totaled 8,637 contracts, compared to net longs of 10,706 in the preceding week.

In the week ahead, investors will be looking to U.S. data on retail sales, consumer prices and consumer sentiment for further indications on the strength of the economy and the need for stimulus.

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

Monday, May 12

• Australia is to publish private sector data on business confidence.
• Later Monday, the U.S. is to publish data on the federal budget balance.

Tuesday, May 13

• Australia is to produce data on house price inflation and home loans, while the government is to release its annual budget report.
• China is to release data on industrial production and fixed asset investment. The Asian nation is Australia’s largest trade partner.
• The U.S. is to produce data on retail sales, as well as reports on import prices and business inventories.

Wednesday, May 14

• The U.S. is to release data on producer price inflation.

Thursday, May 15

• The U.S. is to release data on initial jobless claims, consumer inflation and industrial production, as well as a report on manufacturing activity in the Philadelphia region.

Friday, May 16

• The U.S. is to round up the week with reports on building permits and housing starts, and a preliminary reading on consumer sentiment from the University of Michigan.

NZD/USD weekly outlook: May 12 - 16

The New Zealand dollar fell to a one-week low against its U.S. counterpart on Friday, following comments from Reserve Bank of New Zealand Deputy Governor Grant Spencer.

NZD/USD hit 0.8603 on Friday, the pair’s lowest since May 2, before subsequently consolidating at 0.8612 by close of trade, down 0.4% for the day and 0.6% lower for the week.

The pair is likely to find support at 0.8591, the low from May 2 and resistance at 0.8670, the high from May 8.

RBNZ Deputy Governor Spencer said Friday that the high exchange rate is a cause for concern. He added that housing market prices and the exchange rate are important variables for the pace and timing of interest rate hikes.

"A big uncertainty is the future path of the exchange rate, which has a major bearing on traded goods prices and overall economic activity," he said. "The more downward pressure that the exchange rate exerts on prices and activity, the less pressure will need to be exerted by interest rates."

The RBNZ has raised the official cash rate by 25 basis points twice since March to 3.00% now.

On Wednesday, RBNZ Governor Graeme Wheeler warned against the Kiwi's current strength, saying that "it would become more opportune for the Reserve Bank to intervene in the currency market to sell New Zealand dollars", in the face of worsening fundamentals.

In addition, official data showed that the number of employed people in New Zealand rose by 0.9% in the first quarter, beating expectations for a 0.6% increase, after a 1.1% gain in the three months to December.

The report also showed that New Zealand's unemployment rate remained unchanged at 6.0% in the last quarter, disappointing expectations for a downtick to 5.9%.

Meanwhile, the greenback remained under pressure after Federal Reserve Chair Janet Yellen said Wednesday that a high degree of monetary accommodation remains warranted given the slack in the economy.

Data from the Commodities Futures Trading Commission released Friday showed that speculators increased their bullish bets on the New Zealand dollar in the week ending May 6.

Net longs totaled 20,693 contracts as of last week, compared to net longs of 18,480 contracts in the previous week.

In the week ahead, investors will be looking to U.S. data on retail sales, consumer prices and consumer sentiment for further indications on the strength of the economy and the need for stimulus.

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

Monday, May 12

• The U.S. is to publish data on the federal budget balance.

Tuesday, May 13

• China is to release data on industrial production and fixed asset investment. The Asian nation is New Zealand’s second largest trade partner.
• The U.S. is to produce data on retail sales, as well as reports on import prices and business inventories.

Wednesday, May 14

• The RBNZ is to publish its bi-annual financial stability report. Governor Graeme Wheeler is to hold a press conference to discuss the report. Meanwhile New Zealand is to release data on retail sales.
• Later Wednesday, the U.S. is to release data on producer price inflation.

Thursday, May 15

• New Zealand is to release its annual budget statement, as well as private sector data on manufacturing activity.
• The U.S. is to release data on initial jobless claims, consumer inflation and industrial production, as well as a report on manufacturing activity in the Philadelphia region.

Friday, May 16

• The U.S. is to round up the week with reports on building permits and housing starts, and a preliminary reading on consumer sentiment from the University of Michigan.

GBP/USD weekly outlook: May 12 - 16

Sterling moved lower against the dollar on Friday, pulling back from the almost five year highs struck earlier in the week, but demand for the pound continued to be underpinned by expectations for a U.K. rate hike early next year.

GBP/USD was down 0.48% to 1.6849 late Friday. Earlier in the week, the pair touched highs of 1.6994, the most since August 2009. For the week, the pair slipped 0.11%.

Cable is likely to find support at 1.6700 and resistance at 1.6900.

The pound’s losses came despite data on Friday showing that British factory output grew at its fastest quarterly rate in nearly four years during the first three months of the year.

Output grew 1.4%, up from 0.6% in the fourth quarter of 2013.

A separate report showed that the U.K. trade deficit narrowed unexpectedly in March.

Sterling’s losses were checked as a recent string of upbeat reports about the U.K. economy has bolstered expectations the BoE could raise borrowing costs ahead of other central banks.

The dollar firmed up on Friday after slumping earlier in the week following dovish remarks by Federal Reserve Chair Janet Yellen during testimony to the Joint Economic Committee of Congress.

Speaking Wednesday, Ms. Yellen said that a high degree of monetary accommodation remains warranted given the slack in the economy.

The Fed chief also said the bank expects economic growth to accelerate this year despite the slowdown in the first quarter but warned that the recent housing market slowdown "could prove more protracted than currently expected."

In the week ahead, investors will be looking ahead to the BoE’s quarterly inflation report for further indications of the expected course of monetary policy, as well as the latest U.K. employment report.

The U.S. is to publish reports on retail sales, consumer prices and 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 12

• The U.S. is to publish data on the federal budget balance.

Tuesday, May 13

• The U.K. is to release private sector data on retail sales.
• The U.S. is to produce data on retail sales, as well as reports on import prices and business inventories.

Wednesday, May 14

• The U.K. is to release official data on the change in the number of people unemployed and the unemployment rate and average earnings. The BoE is to publish its quarterly inflation report, and
• Governor Mark Carney is to hold a press conference to discuss the report.
• Later Wednesday, the U.S. is to release data on producer price inflation.

Thursday, May 15

• The U.S. is to release data on initial jobless claims, consumer inflation and industrial production, as well as a report on manufacturing activity in the Philadelphia region.

Friday, May 16

• The U.S. is to round up the week with reports on building permits and housing starts, and a preliminary reading on consumer sentiment from the University of Michigan.

EUR/USD weekly outlook: May 12 - 16

The euro extended losses against the dollar into a second session on Friday, falling to a one-month low at the close, one day after the European Central Bank flagged possible monetary easing as soon as next month.

EUR/USD was at 1.3756 late Friday, the weakest level since April 8, down 0.60% on the day. For the week, the pair was off 0.85%.

The pair is likely to find support at 1.3695 and resistance at 1.3843, Friday’s high.

The euro fell from two-and-a-half year highs against the dollar on Thursday after ECB President Mario Draghi said the bank is “comfortable” with acting to shore up growth and stop inflation from falling too low at its next meeting in June.

The comments came after the ECB left rates on hold, as expected.

Draghi also said the strength of the euro was “a serious concern” and added that the bank would be closely monitoring exchange rate developments.

The single currency came under additional pressure after data on Friday showed that German exports fell 1.8% from a month earlier in March and the country posted a smaller-than-forecast trade surplus.

The euro dropped to two-month lows against the yen, with EUR/JPY at 140.09 late Friday, the weakest since March 4. The pair ended the week down 1.15%.

The U.S. dollar weakened against the other major currencies earlier in the week after Federal Reserve Chair Janet Yellen struck a dovish tone on the economy during testimony to the Joint Economic Committee of Congress.

Speaking Wednesday, Ms. Yellen said that a high degree of monetary accommodation remains warranted given the slack in the economy.

The Fed chief also said the bank expects economic growth to accelerate this year despite the slowdown in the first quarter but warned that the recent housing market slowdown "could prove more protracted than currently expected."

In the week ahead, investors will be looking ahead to preliminary data on first quarter growth in the euro zone, while the U.S. is to publish reports on retail sales, consumer prices and 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 12

• The U.S. is to publish data on the federal budget balance.

Tuesday, May 13

• The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.
• The U.S. is to produce data on retail sales, as well as reports on import prices and business inventories.

Wednesday, May 14

• The euro zone is to produce data on industrial production.
• Later Wednesday, the U.S. is to release data on producer price inflation.

Thursday, May 15

• The euro zone is to publish preliminary data on first quarter gross domestic product, the broadest indicator of economic activity and the leading indicator of economic growth. The bloc is also to produce revised data on consumer inflation.
• The U.S. is to release data on initial jobless claims, consumer inflation and industrial production, as well as a report on manufacturing activity in the Philadelphia region.

Friday, May 16

• The U.S. is to round up the week with reports on building permits and housing starts, and a preliminary reading on consumer sentiment from the University of Michigan.

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