Key US economic reports will dominate the week

Last week saw the end of President Barack Obama's first turn at hosting a major summit, and it ended on an upbeat note, with leaders claiming victory in stopping the recession from turning into a depression. The Group of 20 rich and developing nations promised to give rising powers such as China more say in rebuilding and guiding the global economy, and declared their crisis-fighting efforts a success on Friday. Leaders pledged to keep emergency economic supports in place until sustainable recovery is assured, launch a framework for acting together to rebalance economic growth, and implement tougher rules governing banks by 2012.
This week's economic calendar will be loaded with US economic reports, so the US dollar could see very choppy price action. There is the Conference Board's measure of US consumer confidence which is expected to rise up to a one-year high of 57 from 54.1 in August.
The US non-farm payrolls (NFPs) index is forecast to show job losses for the 21st straight month in September, though the rate of decline is expected to slow further. The unemployment rate is projected to shift up to 9.8 per cent from 9.7 per cent.
The euro had an eventful week of trading and it showed early signs of technical reversal where fresh highs were hit against the US dollar. Strong rallies in the US S&P 500 and other key risk indicators led the euro to highs against most major counterparts. Late in the week, however, saw a plunge in risk appetite which fuelled a flight to safety across the markets. The euro has continued a six-month upward trend but euro/dollar lost much of its short-term momentum after having broken below short-term technical support and threatening further declines. Fundamentals will likely play a fairly significant role in the days ahead as the combination of German and US employment figures will shed a great deal of light on economic conditions in both countries.
Early-week German Consumer Price Index numbers and euro zone consumer confidence figures could produce surprises, but most traders look forward to market-moving German unemployment change figures due on Wednesday. Friday's US nonfarm payrolls result could likewise have a pronounced effect on euro pairs. The critical question remains whether we can expect further equity market gains.
Range for previous week: $1.4606- $1.4842 (Dh5.3647 Dh5.4514)
Range for this week: $1.4685- $1.4950
Risk appetite and other underlying factors have seen some of the major currencies show strength against some pairs and weakness against others. However, the British pound was down across the board this past week. The next few weeks will be critical in establishing where the pound will head, and more importantly, where it fits in the market. Over the past weeks and months, it has become blatantly clear that Europe's second largest economy is struggling to pull itself out of its deep recession; and the time frame for a return to growth is being continuously pushed back. Not only did the second quarter GDP numbers tell us that the slump was more intense than initially thought; but we have also seen that policy officials are running out of options to support an orderly recovery.
Range for previous week: $1.5915 - $1.6465
Range for this week: $1.5860 - $1.6100
The Japanese yen was by far the biggest mover in the currency market last week. The big moves were not owed to risk appetite alone. Although other risk sensitive assets pulled back over the same period they didn't move as much as the yen. The early signs of policy withdrawal and confirmation from the Japanese finance minister indicating that they would not intervene in the FX market both gave the yen its strength.
The Japanese yen has carried the burden for potential intervention from the Bank of Japan for years. As a major export nation, the former DPJ administration considered a 'weak yen' policy essential to economic stability. However, the new LDP Finance Minister Fujii has explicitly said the currency should reflect economics.
Range for previous week: 89.49 yen 92.53 (Dh0.03969 Dh0.04104)
Range for this week: 89.00 yen 92.25 yen