It was a bad week for the Aussie dollar, which weakened on Tuesday on the back of slowing economic growth in China. Then on Thursday we saw the Aussie dollar weaken further after figures showed that the unemployment rate in Australia was higher than expected, at 5.7 %.
As for Japan, the yen strengthened against the dollar on Thursday as the central bank decided not to add further monetary stimulus. The yen was further supported as the IMF increased this year's growth forecast for Japan to 2%, up from the previous 1.6% growth prediction. However some analysts still believe that the Dollar/Yen will break through the 105 level by the end of the year.
We had the FED minutes from the US on Wednesday, which showed that nearly half of the FOMC members voted to rein in the QE programme by the end of the year. However many FOMC members are keen to see better employment data before reducing the current level of stimulus, and we have recently seen some poor figures out from the US. For example on Thursday US initial jobless claims came in at 360,000, versus the projected 340,000 figure. If the data continues to disappoint, it is unlikely that the FED will decide to end QE.
Now over to Europe. The sterling plummeted against the dollar on Tuesday, dropping to its lowest level since 2010, on the back of poor UK manufacturing data. Meanwhile on Tuesday the euro strengthened as Eurozone finance ministers agreed to provide 3 billion euros of aid for Greece.
Now here's what this week has in store. Overnight tonight we have the minutes from the Bank of Japan's policy meeting. Then on Wednesday we have the Bank of England minutes and the Canadian rate decision, and over in the US the Fed releases the infamous Beige Book, while Bernanke gives his semi-annual policy report. On Thursday the main news is UK retail sales, and on Friday we have Canadian CPI, and Eurozone finance ministers are meeting in Russia.
Thank you for watching and see you next week!