Next Week

December 22, 2010

This is only the sixth time since the dollar floated in 1973 when Christmas Day and New Year’s Day fall on a Saturday.  That’s the most disruptive of configurations, because some countries have extra market closures before the holiday but other like Britain and Japan celebrate afterward.  Wednesday will be the only normal day for all key markets of the week.  During the final week in the other five instances when the holidays landed on Saturday — 1976, 1982, 1993, 1999, and 2004, dollar-mark and/or dollar/euro posted a net move of more than 0.5% just once.  Dollar/yen fluctuated over 0.5% in three of the last four instances, with the biggest net change being a drop of 2.6% in 1982 between December 24th and 31st.

Central banks in Israel and the Philippines have scheduled interest rate announcements next Monday and Thursday, respectively, and Bank of Japan minutes from the November policy meeting will be published.

Japan is the only advanced economy in which Christmas is not celebrated.  In 1989, the Bank of Japan famously shocked the currency market world by raising its discount rate to 4.25% from 3.25% only six weeks after having kicked the rate up by 75 basis points.  No fireworks like that will occur next week, but Japan does have a slew of scheduled data releases covering industrial production, retail sales, household spending, wage earnings, consumer prices, corporate service prices, housing starts, construction orders, small business sentiment, and the manufacturing purchasing managers index.

Selected other Asian statistical arrivals next week are current account figures for India and South Korea, Hong Kong trades, Singapore producer prices, Thai factory output, and South Korean industrial production.

U.S. releases will include the Case-Shiller house price index, the K.C. and Richmond Fed manufacturing activity indices, consumer confidence, pending home sales, the Milwaukee and Chicago PMI indices, and the usual assortment of weekly gauges for chain store sales, unemployment insurance claims, mortgage applications, energy stocks and consumer confidence.

Euroland reports money and credit growth and the index of leading economic indicators.  There are a number of national data releases from the region coming out as well such as German consumere prices, Italian, Greek and Dutch producer prices, revised French GDP, Spanish retail sales and current account, Portuguese industrial production, and Greece’s trade deficit.

Britain, where markets are shut until Wednesday, has just some house price gauges, the Nationwide index and perhaps the Hometrack measure.  Sweden releases M2 money, the trade balance, and retail sales, while the Swiss consumption indicator and index of leading economic indicators will be on tap.

Further east in Europe, investors will learn the latest moves in Czech consumer and business sentiment as well as money growth.  Current account figures will be announced by Poland and Hungary.

Turkey reports on capacity use and the trade balance.  Australia releases private credit growth, and Brazil will publish its money aggregates.  Statistics Canada plans no releases.

And when its all done, another year, the 38th of the floating dollar era, will be in the record books.  So far, the U.S. currency has ranged from 1.4582 to 1.1878 against the euro, 1.6457 and 1.4232 against sterling, and 1.083 to 0.8068 per Australian dollar.  Other 2010 trading extremes have been CHF 1.1730 and CHF 0.9466, JPY 94.98 and JPY 80.25, and CAD 1.0851 and CAD 0.9931 per U.S. dollar.  Dollar ranges in calendar 2009, by comparison, are shown below:

2009 Dollar Low 2009 Dollar High
1.5144 per euro 1.2458 per euro
1.3505 per pound 1.7043 per pound
0.9405 per Aussie dollar 0.6250 per AUD
JPY 84.83 JPY 101.44
CHF 0.9919 CHF 1.1967
CAD 1.0207 CAD 1.3064

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.

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