Consensus forecasts are that the Federal Reserve, ECB and Bank of England will increase interest rates by 50 basis points.

US initial jobless claims increased slightly to 230,000 in the latest week from a revised 226,000 previously and in line with consensus forecasts.

Continuing clams increased to 1.67mn from 1.61mn which was higher than expected and the highest reading since early January. Although initial claims remained low, the gradual increase in continuing clams suggested that companies were more cautious over hiring policies.

US Treasuries lost some ground after Thursday’s New York open, but there was fresh buying during the Asian session with the 10-year yield near 3.45% on hopes for favourable inflation developments.

Lower yields again sapped dollar support and the US currency was unable to gain any support from overall risk conditions despite reservations over the global economy.

US Treasuries posted further gains during Wednesday and secured further support in Asa on Thursday with the 10-year yield declining to a 10-week low below the 3.50%.

There are major events next week with policy decisions from four major central banks as well as the latest data on US consumer prices.

Consensus forecasts are that the Federal Reserve, ECB and Bank of England will also increase interest rates by 50 basis points.

The US producer prices and Michigan consumer confidence data will serve as appetisers on Friday with an element of support for risk appetite if there is weaker than expected data, although there will also be position adjustment into the weekend.

There were no major Euro-Zone developments during Thursday. Equities held steady which limited scope for single-currency selling. Low yields sapped dollar support during the day.

EUR/USD found support below 1.0500 and rallied towards 1.0550 in Europe with a further net advance to 1.0580 on Friday as the dollar drifted lower again. Low US yields underpinned the yen with the Japanese currency resilient on the crosses. USD/JPY retreated to lows just below 135.80 on Friday before a minor recovery to just above 136.00.

The Swiss franc resisted selling with USD/CHF retreating to 0.9340 and EUR/CHF again hitting resistance near 0.9900.

There were no major UK developments as underlying housing-sector reservations sapped currency support. GBP/USD found support above 1.2150 and regained 1.2200 with gains to 1.2265 on Friday as the dollar lost ground.

Commodity currencies were underpinned by a soft dollar. AUD/USD advanced to 0.6760 on Thursday and edged higher to 0.6780 on Friday. USD/CAD dipped back below 1.3600 to lows near 1.3560 before settling just below 1.3600.

Economic Calendar