Last week was characterized with a relatively empty US calendar aside from the Durable Goods Orders and New Home Sales which were released on Friday. Both figures beat expectations, boosting the major U.S. stock indices. The U.S. Durable Goods Orders was released at 5.9%, showing its biggest growth since September, while New Home Sales rose by 2.8%. The strong New Home Sales figures helped to calm market nerves, but despite strong U.S. economic data, the USD fell against most major currencies on Friday. In fact, traders are speculating that losses on sub-prime mortgages are still growing and the housing crisis probably won't be over any time soon.

As for this week, the US calendar will be quite full with major events, starting today with the US Existing Home Sales. The expectations for the Home Sales release are currently standing at 5.75M, the same as last month's, and will probably not generate too much price movement if it is released inline with expectations. Tomorrow, the FOMC Meeting Minutes will expose the votes cast at the previous meeting and will probably clarify the Fed's intentions regarding the future interest rate's "fate". After the announcement we may see the USD begin to find a clearer path.

Although the better-than-expected previous week's data shed some positive light on the greenback, it's still too early to get excited by positive data. This week should provide a clearer picture of what impact the credit crisis is likely to have on U.S. and global growth.

Last week, the EUR had the biggest rally against the USD since mid-March. The Euro zone currency strengthened 1.5% against the USD touching the 1.3685 level. The EUR trimmed its gains against the greenback after it became clear that the European Central Bank is not necessarily committed to raising interest rates in September. On Aug. 22, the ECB loaned an additional 40 billion EUR to banks, thus indicating that injecting liquidity is proving to be an effective short-term tactical move. Today, all attention will be focused on ECB President Trichet's speech at 13:00GMT. Traders will watch for clearer signals whether the European Central Bank will raise interest rates on Sept. 6. The ECB will probably keep its options opened, pledging liquidity to the banking system without closing the door on an increase. Apart from this, the present week will be very light on market moving news from the Euro-zone; therefore most price movement on EUR pegged currencies will be derived mainly from the U.S. markets.

Last week we saw the Japanese economy slowly sliding into its natural place in the carry trades global system, which is a slow and consistent weakening process. After the great bonanza that took the USD/JPY to the 112.00 levels, we now see carry trades returning all across the board. the fact that the BOJ kept rates unchanged only strengthens the notion that even with the recent US Sub-Prime crisis and the ongoing USD weakness, carry trades are going back to being very attractive, and will probably keep the JPY crosses in a constant strengthening trend.