The euro appreciated vis-à-vis the U.S. dollar last week as the single currency tested offers around the $1.5785 level and was supported around the $1.5465 level. The pair gained about 180 pips last week. The FOMC kept rates unchanged at 2.00% with Dallas Fed’s Fisher voting for a hike and many traders don’t see a Fed hike before December at the earliest.

The ECB is expected to lift the repo rate by 25bps to 4.25% this week. ECB’s Stark said it’s essential “we seriously examine” interest rates. Germany lifts its 2008 GDP forecast to 2.3%. The ECB will hold a press conference on 7 August. ECB’s Noyer reported there is “no concrete threat of a (further) credit crunch.”

Data released in the U.S. last week saw June consumer confidence fall to 50.4; the April Case Shiller house price index was off a record 15.3% y/y; the Richmond Fed June manufacturing index printed at -12; May durable goods orders were unchanged m/m and off 0.1% y/y with the ex-transportation component off 0.9% m/m; May building permits were revised to -0.4% from -1.3%; May new home sales were off 2.5% to an annualized 512,000 unit pace; May existing home sales were up 2.0% to an annualized 4.99 million pace; final Q1 GDP was upwardly revised to 1.0%; weekly initial jobless claims were unchanged at 384,000 with continuing jobless claims up 82,000 to 3.139 million; May personal income was up 1.9% and May personal spending was up 0.8%; the core PCE price index was up 0.1% m/m and 2.1% y/y; and the final June University of Michigan consumer sentiment index fell to 56.4.
Data released in the eurozone last week saw the German June Ifo business climate index fall to 101.3; the EMU-15 services PMI survey fell to 49.5 with the manufacturing PMI survey at 49.1; the German GfK July consumer sentiment index fell to 3.9; the French June business climate indicator was unchanged at 102; EMU-15 April factory orders were up 2.5% m/m and 11.7% y/y; EMU-15 May M3 money supply growth registered 10.5% y/y; German May import prices were up 2.4% m/m and 7.9% y/y; German June CPI was up 0.3% m/m and 3.3% y/y; the EMU-15 current account balance improved to -€300 million; French Q1 GDP was revised to 0.5% and French May PPI was up 1.3% m/m and 6.7% y/y.

The yen appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the ¥105.85 level and was capped around the ¥108.40 level. The pair lost about 140 pips last week. The Nikkei 225 stock index lost 2.01% on Friday to close at ¥13,544.36. BoJ’s Tankan will be released this week and is expected to weaken. Fukuda wants the G8 to discuss elevated food and oil prices. BoJ Policy Board member Nakamura said inflation risks grew in June. Recession risks have increased in Japan.
Data released in Japan this week saw the government’s measure of Q2 large Japanese companies’ sentiment fall to -15.2; May supermarket sales were off 1.1%; the May merchandise trade surplus shrank to ¥365.61 billion; the May corporate services price index climbed +0.2% m/m and +0.6% y/y; May household spending fell 3.2% y/y; core inflation was up 1.5% y/y in May; the May unemployment rate was steady at 4.0%; and May industrial output rose 2.9%.

In Chinese news, the Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8622 in the over-the-counter market, down from CNY 6.8796. China’s foreign reserves totaled US$ 1.76 trillion at the end of April.

Data released in China last week saw industrial profits up 20.9% y/y between January and May.

The British pound appreciated vis-à-vis the U.S. dollar last week as cable tested offers around the US$ 1.9950 level and was supported around the $1.9585 level. The pair gained about 190 pips last week. MPC’s Sentance hawkishly said the BoE must prevent wage and price increases in response to temporary higher inflation. BoE’s Gieve sees a further “downturn in economic activity” this year. BoE’s King said his letter to Chancellor Darling was not intended to be dovish. MPC officials discussed a rate hike this month.
Data released in the U.K. last week saw Rightmove June house prices fall 1.2% m/m; BBA May mortgage approvals fell to a decade-old low; the CBI June retail sales balance was -9%, up from -14% in May; Q1 business investment declined 1.8% q/q; and Q1 GDP was downwardly revised to +0.3% q/q and was up a yearly 2.3%.

The Swiss franc appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the CHF 1.0165 level and was capped around the CHF 1.0490 level. The pair lost about 175 pips last week. The Swiss government sees 2008 inflation growth and economic growth of 2.5% and 1.9%, respectively. The Swiss government sees a budget surplus of CHF 1.4 billion in 2009. The Central Bank of the Russian Federation may increase its Swiss franc holdings.
Data released in Switzerland last week saw the UBS May consumption indicator decline to 1.91 and the KOF June leading index fell to 1.01.

The Canadian dollar appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the C$ 1.0045 level and was capped around the C$ 1.0190 level. The pair lost about 35 pips last week. Canada’s Supreme Court overturned a lower-court decision that blocked a C$ 34 billion leveraged buyout of BCE Inc.
Data released in Canada last week saw Canadian May producer prices rose 0.6% m/m; the raw materials price index was up 3.1%; and April average weekly earnings rose 3.2% y/y.

The Australian dollar appreciated vis-à-vis the U.S. dollar last week as the Aussie tested offers around the US$ 0.9630 level and was supported around the US$ 0.9490 level. The pair gained about 75 pips last week.
Data released in Australia last week saw Q1 average annual enterprise wages rise 3.7%.