Busy week for euro and US dollar ahead

After Wednesday's fall in unemployment, last Friday's GDP figure from the UK confirmed what most investors and analysts feared: the UK economy had contracted in the fourth quarter of 2012 meaning the country is edging ever closer to a triple-dip recession. With David Cameron's almost backtrack on an EU In/Out referendum, Sterling had a difficult week. GBP/EUR fell to over a ten-month low to finish below 1.18. GBP/USD also hit fresh lows to strike below 1.58 for the first time since August, while EUR/USD continues to push higher as it starts to test the 1.35 level and is trading at ten-month highs. We also saw continued weakness for the yen after the new Japanese prime minister said that the central bank will start further easing at the earliest in 2014.

USD – Today we see durable goods orders expected to show minimal growth of around 0.7% from 1.6%. Tuesday we have US Consumer Confidence expecting a slight fall. Wednesday sees US GDP preliminary data before the important interest rate decision and press conference with any news about ending QE3 early likely to provide significant talking points. Thursday's initial and continuing jobless claims expected to rise as Christmas hires are turned away again. Friday is the most important number for the week the non-farm payroll, expected to remain on hold as last month around 155,000 new jobs with ISM Manufacturing also expecting slight fall but still growth.

EUR – After last week's continued euro strength and the announcement that over €130 billion in LTRO payments are to begin we have a busy week for the euro and expect euro demand. Tuesday we have Spanish GDP expected to continue to show that it is still in contraction with the recession lingering on, especially after last week's report showing umployment has breached 26%.

Last week's German business sentiment and PMI data has hinted at a turn around in the Eurozone's largest economy, with the unemployment rate expected to stay on hold at 6.9%. Thursday we see German CPI expected to show a fall in inflation. Friday's CPI inflation figure for the Eurozone is expected to remain on hold at 2.2% and Manufacturing PMI from across the Eurozone's four largest economies. 

GBP – A quiet week data-wise after the IMF downgraded the outlook for the UK economy to negative. Wednesday, mortgage approvals will be a watched figure to gauge if the UK housing market is picking up with Nationwide HPI expected to show a minimal amount of growth in house values of 0.2%. Friday's manufacturing PMI is expected the show growth in the UK housing industry.