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The US dollar made a huge comeback, riding on the clearer prospects of QE tapering. Will it continue marching forward in the last week of June? German Ifo Business Climate, US Durable Goods Orders, Housing data, Unemployment Claims and Canadian GDP are the main market-movers this week. Here is an outlook on the important events awaiting us.

Fed Chairman Ben Bernanke announced the Federal Reserve will likely scale down its bond-buying program this year if the economy continues to improve. The FOMC improved its outlook for unemployment and economic expansion. The members voted to keep the pace of bond buying at this stage but said the FOMC will slow down bond buying if the economy continues to improve and would end QE altogether in mid-2014. The statement and Bernanke’s words sent the dollar shooting higher, with commodity currencies suffering the most. Is the move overdone or can we expect more gains?

  1. German Ifo Business Climate: Monday, 8:00. German business confidence advanced in May for the first time in three months, rising from 104.4 to 105.7, indicating growth in  Europe’s biggest economy is gathering pace. Germany’s growth trend continues despite the lingering weakness related the Euro area debt crisis. German  consumer confidence  is expected to climb to the highest in more than 5 1/2 years in June amid low unemployment and weakening inflation boosting households spending. A further rise to 106 is expected now.  EUR/USD Extends Decline towards 1.3000 and Lower
  2. US Durable Goods Orders: Tuesday, 12:30. Orders for long lasting products in April edged up better than expected; rising 3.3% following a 5.7% plunge in March. Meanwhile core orders excluding transportation rebounded 1.3%, after a drop of 1.5% the previous month. Economists expected a 0.6% climb. Aircraft manufacturing was the main contributor to Durable goods orders while Core orders remained soft in line with predictions. Durable Goods Orders are expected to gain 3.0%, while core orders are predicted to drop 0.1%.
  3. US CB Consumer Confidence: Tuesday, 14:00. Consumer confidence increased in May to the highest level in more than five years, advancing to 76.2 from an upwardly revised 69 in April, beating market predictions for a 71 reading. Consumer sentiment is on a recovery path after the contraction following the fiscal cliff ordeal. A small decline to 75.6 is expected this time.
  4.  US New Home Sales: Tuesday, 14:00. New home sales continued to advance in April, climbing to 454,000 from 444,000 in March, another sign of strength in the housing sector. A small supply of new homes for sale increased sales price to $271,600, up 8% from March and 15% from a year ago. The new home sales is an important indicator since it impacts the overall economy. Another rise to 462,000 is forecast.
  5. US Final GDP: Wednesday, 12:30. The final read of GDP for Q1 is expected to confirm the annual growth rate of 2.4% that was reported in the second release. This isn’t the satisfactory growth of 3% that was desired, but is still better than many other countries. While this is a late figure, any revision can move markets.
  6. US Unemployment Claims: Thursday, 12:30. Applications for U.S. unemployment benefits increased by 18,000 last week to a seasonally adjusted 354,000. The  four-week average advanced by 2,500 to 348,250. However despite the increase, the readings are broadly in line with market predictions. Hiring remained steady, despite an increase in taxes and massive federal spending cuts. Improved consumer spending and a boost in housing have helped the economy to overcome the fiscal strain. Applications are anticipated to increase by 351,000.
  7. US Pending Home Sales: Thursday, 14:00. Contracts to buy previously owned U.S. homes increased 0.3% in April reaching 106.0, the highest reading since April 2010. The increase was smaller than anticipated. The low increase may be attributed to the shortage of properties for sale. A bigger gain of 1.1% is projected.
  8. Canadian GDP: Friday, 12:30. Canada’s GDP rose a modest 0.2% in March amid mining, quarrying, and oil and gas extraction. This reading followed a 0.3% gain in the previous month. On an annual basis, the country’s GDP growth rose 1.7% in the month after climbing at the same rate in February. Analysts expected a smaller rise of 0.1%.   Economists project the modest rise will continue this year to an average growth of 1.6%. No growth is expected in April.

That’s it for the major events this week. Stay tuned for coverage on specific currencies

*All times are GMT.

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