Forex - Weekly Outlook: August 22 - 26

Forexpros – The U.S. dollar fell to a fresh record low against the yen on Friday, as a combination of fears over sovereign debt issues in the U.S. and the euro zone and concerns that global economic growth is faltering spurred a flight to safety.

The dollar also weakened against the Swiss franc, prompting speculation that the Swiss National Bank would intervene in currency markets to curb the Swissie’s gains.

Japan’s Vice Finance minister for International Affairs, Takehiko Nakao said Friday the yen’s gains did not reflect economic fundamentals, adding that there was an "element of speculation" behind it.

Japanese officials intervened to weaken the yen on August 4 and have continued to verbally warn markets against pushing up the yen, with Finance Minister Yoshihiko Noda saying Friday that he would “keep monitoring markets carefully.”

The euro gained against the dollar last week as the European Central Bank continued buying government bonds to keep the region’s sovereign debt crisis from spreading, while European Union officials stepped up efforts to deal with the debt crisis.

On Tuesday, German Chancellor Angela Merkel and French President Nicolas Sarkozy proposed tighter policy coordination between euro zone member states, in an attempt to reassure markets about the cohesion and survival of the single currency bloc.

Commodity linked currencies also weakened broadly as investors shunned higher yielding assets, with the Canadian dollar falling as crude oil, the nation’s largest export, tumbled.

Crude oil for September delivery dropped 3.65% to USD82.26 a barrel on the New York Mercantile Exchange.

Meanwhile, New Zealand’s dollar declined for the third successive week, while the Australian dollar edged higher, supported by record gold prices.

Looking ahead, speculation that Federal Reserve Chairman Ben Bernanke could use the Jackson Hole symposium to announce that additional measures to support the U.S. economy may be required seem likely to continue to weigh on market sentiment in the coming week.

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

The U.S. is to publish data on mortgage delinquencies, a sign of health in the housing market.

Switzerland is to publish official data on its trade balance, the difference in value between imported and exported goods and services. Elsewhere, New Zealand is to publish a report on inflation expectations.

The U.K. is to publish industry data on mortgage approvals and industrial order expectations.

The euro zone is to produce preliminary data on activity in the manufacturing and services sectors, while France and Germany are to publish individual reports. Meanwhile, the ZEW Centre for Economic Research is to release a report on German business confidence, a leading indicator of economic health.

Later in the day, Canada is to publish government data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity.

Also Tuesday, the U.S. is to release official data on new home sales, a leading indicator of economic health.

Australia is to publish an index of leading economic indicators, designed to predict the future direction of the economy, as well a data on completed construction projects, an important gauge of the construction industry. Meanwhile, New Zealand is to publish official data on its trade balance.

The euro zone is to produce official data on industrial new orders, a leading indicator of production, while the Ifo Institute for Economic Research is to release a report on German business climate, a leading indicator of economic health.

Later Wednesday, the U.S. is to publish government data on durable goods orders, a leading indicator of production. The country is also to publish data on crude oil inventories.

New Zealand is to publish official data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity.

The U.K. is to publish a report on consumer confidence, an important signal of consumer spending, as well as industry data on retail sales, an important indicator of economic health.

The euro zone is to publish a report on Gfk German consumer climate, an important indicator of economic health. Elsewhere, Switzerland is to produce official data on the employment level, while the ZEW Centre for Economic Research is to release a report on Swiss economic expectations.

Later in the day, the U.S. is to publish government data on initial jobless claims, a leading indicator of economic health.

Thursday is also the first day of the annual global economic symposium in Jackson Hole, Wyoming.

In Australia, the Governor of the central bank, Glenn Stevens is to speak; his comments will be closely watched for any clues to the future direction of monetary policy.

Japan is to produce official data on consumer price inflation, which accounts for a majority of overall inflation.

The U.K. is to publish revised data on second quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy's health.

Elsewhere, the euro zone is to publish data on M3 money supply, while Switzerland is to publish its KOF economic barometer, an index of leading economic indicators.

The U.S. is to publish preliminary data on GDP, a leading indicator of economic growth, while the University of Michigan is to release revised data on consumer sentiment and inflation expectations. Meanwhile, Fed Chair Ben Bernanke is to speak at the second day of the economic symposium in Jackson Hole.

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