Fate of EUR/USD Will Depend On Who Delivers the Bigger Surprises (page 2 of 2)

UK economic data was mixed with the GfK consumer confidence report and Nationwide house prices falling short of expectations. The current account did improve, but not enough to offset the bearish sentiment. The quarterly pace of GDP growth in the fourth quarter was unrevised, but the annualized pace of growth was lowered from 2.9 to 2.8 percent. Like the US, the UK economy is very vulnerable especially since consumer confidence hit a 15 year low. The Financial Times is also worried about the health of UK lenders. All three of the country's largest banks hiked mortgage rates yesterday, putting further pressure on home owners. Next week, PMI numbers dominate the UK economic calendar.

Weaker Commodity Prices Drive Australian, New Zealand and Canadian Dollars Lower

The commodity currencies lost ground against the US dollar on the back of lower oil and gold prices. New Zealand's GDP figures came in stronger than expected, with main contributors being rising dairy, petroleum and petroleum products exports. In spite of strong growth figures, fears of a slowdown continue to worry economists as the housing market continues to cool and businesses remain to be pessimistic. Next week's releases should impact markets significantly, as business confidence coupled with ANZ commodity price, should help investors gain a perspective on the future performance of the business sector. Although no significant news was released for Australia and Canada today, upcoming releases promise to be a handful, with the Reserve Bank of Australia monetary policy meeting. Canada is set to release their GDP and unemployment figures.

Yen Rallies as Risk Appetite Turns

The intraday turn in the Dow led to a similar reversal in the Japanese Yen crosses. Economic data from Japan last night was mixed with CPI rising by the fastest pace in 10 years, retail sales dropping less than expected and the unemployment rate rising for the first time in 4 months. Expect the Yen to remain in focus next week with a heavy economic calendar that includes Manufacturing PMI, Industrial Production, Labor Cash Earnings, and the Quarterly Tankan report. The strong Yen coupled with a global market slowdown is expected to take a toll on Japanese business confidence but even though this may impact the Yen, risk appetite is ultimately what matters.