The week starts with a public holiday in the US for presidents day, so little to report in either Europe or the US today for the euro dollar pair, as the G7 finance ministers wend their weary way home after a hard weekend of work in Rome! ( some slightly the worse for wear if the reports are to be believed with the Japanese minister blaming his medicine and its reaction with the alcohol!). If you would like to see all the data due for release this week then please just follow the link here to the weekly economic calendar.

Tuesday sees two important news releases for the euro to dollar pair with the German ZEW figures in the morning, followed by the TIC Long Term Purchases in the US in the afternoon.The first is a survey of about 350 German institutional investors and analysts which asks respondents to rate the relative 6-month economic outlook for Germany. A number above zero indicates optimism and below is pessimism with the forecast being -26.5 against a previous of -31.0 so a slight improvement in sentiment. If the actual is better than the forecast then this is generally good for the currency, in this case the euro. The afternoon see the TIC ( Treasury International Capital) figures which represent the difference in value between foreign long-term securities purchased by US citizens and US long-term securities purchased by foreigners during the reported period, and you might well ask why these numbers are important! The simple explanation is that this data represents the balance of domestic and foreign investment – let me give an example which I hope will clarify the situation. If foreigners purchased $100 billion in US stocks and bonds, and the US purchased $30 billion in foreign stocks and bonds,then the net reading would be 70.0B. The market impact tends to be significant but this does vary from month to month. The forecast this time is for +20.0B against a previous of -21.7B. If the numbers are better than forecast then this is generally good for the home currency – the US dollar.

Wednesday is all about the US data, with none in Europe, and we start with the Building Permits in the morning, followed by the speech by Bernanke in the afternoon and the release of the FOMC meeting minutes. The Building Permits provide an excellent gauge of future construction activity because obtaining a permit is among the first steps in constructing a new building, which in turn has a knock on effect into the broader economy. Whilst this is a monthly set of data it is in fact reported on an annualized basis with the forecast for this month being 0.52M against a previous of 0.55M. If the numbers are better then expected then this is a good signal for the US currency. This is followed by Bernanke, who is due to speak about the FED’s lending programs and its balance sheet at the National Press Club, in Washington DC. Audience questions are expected and it is during this session that we can expect some volatility as unscripted replies can often provide better clues than pre-prepared speeches. If the tone of the speech is more hawkish then this is generally good for the US dollar. Finally the day rounds off with the FOMC meeting minutes which provide a detailed record of the FOMC’s most recent meeting, providing in-depth insights into the economic conditions that influenced their vote on where to set interest rates.

Again on Thursday we have very little news in Europe, with the main numbers coming in the US with the PPI data and Unemployment Claims. The PPI numbers represent the change in the price of finished goods and services sold by producers, but they tend to have more impact when  released ahead of the CPI data because the reports are tightly correlated. The forecast is for +0.2% against a previous of -1.9% and if the actual is better than forecast this is generally good for the US dollar. It is considered a leading indicator of consumer inflation and can have a serious impact on the currency once released. At the same time we have the weekly Unemployment figures which is the number of people who have registered for Unemployment insurance. This is generally considered a lagging indicator and the forecast is 620,000 against a previous of 623,000 last week.

Finally on Friday the week rounds off for the euro to dollar with the several sets of data in Europe, which will have a minor effect on the Euro, whilst in the US in the afternoon we have one of the big numbers – Core CPI month on month. This number is the change in the price of goods and services purchased by consumers, excluding food and energy. The reason it is so important is that  food and energy prices account for about a quarter of CPI, but they tend to be very volatile and distort the underlying trend, and as a result the FOMC pays the most attention to the Core data, as do traders! The forecast this time is 0.1% against a previous of -0.7%, and if the numbers are better than expected then this is generally good for the home currency, in this case the US dollar.