Investing.com - The dollar fell to seven week lows against the yen on Friday and hit three week lows against the Swiss franc, as a broad based selloff in financial markets spurred safe haven demand.
USD/JPY fell to 102.00, the weakest since December 6 and was last down 0.91% at 102.33. For the week, the pair lost 1.83%. USD/CHF fell to lows of 0.8902 and was last down 0.32% to 0.8943, extending the week’s losses to 1.82%.
Market sentiment was hit by concerns over a slowdown in China after data on Thursday showed that the preliminary reading of the HSBC manufacturing index fell to a six-month low in January.
The growth linked Australian dollar came under renewed selling pressure following the soft Chinese data, falling to three-and-a-half year lows against the U.S. dollar. AUD/USD hit lows of 0.8659 and was last down 0.97% to 0.8682. For the week, the pair dropped 1.37%.
The Aussie was not helped after a Reserve Bank of Australia board member said Friday that a value of around USD0.80 would be a “fair” level for the currency.
A selloff in emerging markets accelerated on Friday, after the Turkish lira fell to the latest in a series of record lows against the dollar, when a currency market intervention by Turkey’s central bank failed to halt the currency’s steep decline. South Africa’s rand, the Russian ruble and the Argentine peso fell to multi-year lows against the dollar.
Argentina's central bank said Friday it was loosening strict foreign exchange rules, giving up its traditional policy of supporting the currency through interventions.
Emerging market currencies have been hard hit since the Federal Reserve announced plans last month to begin scaling back its asset purchase program. Recent indications that the global economic recovery is deepening has fuelled expectations that some central banks may move to tighten monetary policy this year. Data last week showing a sharper than expected fall in the U.K. unemployment rate heightened expectations that the Bank of England may tighten monetary policy sooner than anticipated.
Sterling rose to two-and-a-half year highs of 1.6668 against the dollar on Friday, but ended the session down 0.94% at 1.6480.
The euro ended Friday’s session slightly lower against the dollar, with EUR/USD down 0.17% to 1.3676, after rising to three-week highs of 1.3738 earlier. Elsewhere, the common currency was sharply lower against the yen and the Swiss franc. EUR/JPY fell 1.05% to 139.97, while EUR/CHF fell 0.44% to a one-month low of 1.2231.
In the week ahead, Wednesday’s outcome of the Federal Reserve’s monthly meeting will be in focus amid expectations for a reduction to USD65 billion from the current USD75 billion in the bank’s stimulus program.
Data from the U.S. and the U.K. on fourth quarter growth and euro zone data on inflation will also be closely watched.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 27
The Bank of Japan is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective. Japan is also to release data on the trade balance, the difference in value between imports and exports.
In the euro zone, Germany is to release the Ifo report on business climate.
The U.S. is to produce data on new home sales, a leading indicator of demand in the housing sector.
Tuesday, January 28
Australia is to publish private sector data on business confidence, a leading indicator of economic health.
The U.K. is to release preliminary data on fourth quarter gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.
In the euro zone, Italy is to hold an auction of 10-year government bonds.
The U.S. is to release data on durable goods orders, a leading indicator of production, as well as what will be a closely watch report on consumer confidence.
Wednesday, January 29
The Federal Reserve is to announce its federal funds rate and publish its rate statement.
The Reserve Bank of New Zealand is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
New Zealand is also to publish data on building consents.
Thursday, January 30
Japan is to produce official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
Australia is to release data on import prices, while China is to publish the revised reading of the HSBC manufacturing PMI.
Germany is to produce preliminary data on consumer price inflation, which accounts for the majority of overall inflation, as well as a report on the change in the number of people unemployed. Elsewhere in the euro zone, Spain is to release preliminary data on fourth quarter growth.
Switzerland is to publish its KOF economic barometer.
The U.K. is to release data on net lending to individuals.
The U.S. is to publish preliminary data on fourth quarter economic growth. The nation is also to release the weekly report on initial jobless claims and data on pending home sales.
Later Thursday, New Zealand is to produce data on the trade balance.
Friday, January 31
Japan is to release a series of data, including reports on household spending, inflation, and industrial production.
Australia is to produce reports on producer price inflation and private sector credit.
The euro zone is to release preliminary data on consumer inflation and a separate report on the unemployment rate across the currency bloc
Canada is to publish the monthly report on GDP growth.
The U.S. is to round up the week with a report on manufacturing activity in the Chicago region, revised data on consumer sentiment and a report on personal spending.