The euro depreciated vis-à-vis the U.S. dollar last week as the single currency tested bids around the $1.5655 level and was capped around the $1.5465 level. The pair lost about 85 pips last week. Treasury Secretary Paulson verbally intervened to support the U.S. dollar. Atlanta Fed President Lockhart sees Q2 GDP growth “substantially” above Q1’s 1.0% pace. Bush verbally intervened to support the dollar.

Germany’s DIW lifted its 2008 GDP forecast to 2.7%. ECB lifted its refinancing rate by 25bps to 4.25% and Trichet is not precommitting to another hike. ECB’s Liebscher said the ECB has no policy bias but is concerned about “gruesome upward changes to the inflation outlook.” Banco de Espana sees lower Q2 GDP growth.

Data released in the U.S. last week saw the Chicago June PMI print at 49.6; June manufacturing ISM increased to 50.2 with the prices index up to 91.5; ADP June payrolls were off 79,000; May factory orders were up 0.6% with the ex-transportation component up +0.4%; June non-farm payrolls were off 62,000 with a cumulative downward revision of 52,000 to April’s and May’s tallies; the June unemployment rate was steady at 5.5% with average hourly earnings up 3.4% y/y; and weekly initial jobless claims were up 16,000 to 404,000.
Data released in the eurozone last week saw EMU-15 June CPI rise to 4.0%; German May wholesale sales were off 0.9% m/m and 0.8% y/y; the EMU-15 May jobless rate was steady at 7.2%; EMU-15 June PMI contracted for the first time in three years; German June PMI printed at 52.6; EMU-15 PPI was up 1.2% m/m and 7.1% y/y; German may new plant, machinery was off 12% y/y; EMU-15 May retail sales rose 1.2% m/m and 0.2% y/y; German June final services PMI fell to 49.1; the EMU-15 June services PMI fell to 49.1; and German manufacturing orders fell 0.9%.

The yen depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the ¥106.90 level and was supported around the ¥105.00 level. The pair gained about 55 pips last week. The Nikkei 225 stock index lost 0.21% on Friday to close at ¥13,237.89. Moody’s lifted the credit ratings of Japanese government bonds. Nikkei expects BoJ to lower its economic assessment for the FY to March 2009 on 14-15 July and acknowledge higher price risks. G8 policymakers convene in Hokkaido this week and inflation will be priority number one. A BoJ consumer expectations survey sees higher prices next year.
Data released in Japan this week saw May housing starts fall 6.5% y/y; May construction orders were off 25.2% y/y; BoJ’s Tankan quarterly Tankan survey of large manufacturers’ sentiment fell to +5; May employees’ average pay rose 0.2%; average land prices were up 10% in 2007; the June monetary base was up 0.4% y/y; the May leading index fell to 92.6; and May leading indicators were at 40.0 with the coincident index at 33.3.

In Chinese news, the Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8589 in the over-the-counter market, down from CNY 6.8622. PBoC’s Zhou reiterated China has several monetary policy instruments at its disposal. Primer Wen called on the U.S. to “stabilize” the dollar.

Data released in China last week saw the June CLSA PMI survey fall to 53.3; the June CFLP PMI survey receded to 52.0; and the May consumer confidence index rose to 94.3 from 94.0.

The British pound depreciated vis-à-vis the U.S. dollar last week as cable tested bids around the US$ 1.9795 level and was capped around the $2.0005 level. The pair lost about 120 pips last week. The BoE Credit Conditions survey saw lower credit in the three months to March. BoE Deputy Governor Bean sees ongoing market dislocations.

Data released in the U.K. last week saw Hometrack June house prices off 1.0% m/m and 3.2% y/y; Bank of England reported May mortgage approvals fell to 42,000; BSA May mortgage approvals fell to ₤2.34 billion; final May M4 money supply growth was unrevised at 0.4% m/m and 10.9% y/y; the June manufacturing PMI survey fell to 45.8; Nationwide June house prices were off 0.9% m/m and 6.3% y/y; June construction PMI fell to 38.8; BoE house equity withdrawals fell to ₤5.0 billion; the June services PMI survey fell to 47.1 with the prices charged sub-index up fractionally; and IDS pay deals were up 3.5% in the three months to the end of May.

The Swiss franc depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the CHF 1.0280 level and was supported around the CHF 1.0110 level. The pair gained about 50 pips last week.
Data released in Switzerland last week saw June PMI fall to a three-year low around 54.9, down from 55.7, and June CPI was up 0.2% m/m and 2.9% y/y.

The Canadian dollar depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the C$ 1.0235 level and was supported around the C$ 1.0060 level. The pair gained about 45 pips last week.
Data released in Canada last week saw April GDP up 0.4% m/m.

The Australian dollar appreciated vis-à-vis the U.S. dollar last week as the Aussie tested offers around the US$ 0.9665 level and was supported around the US$ 0.9510 level. The pair gained about 25 pips last week. Reserve Bank of Australia kept interest rates unchanged.

Data released in Australia last week saw private sector credit growth climb 0.6% m/m and 13.4% y/y; the TD Securities monthly inflation gauge rose 0.5% m/m and 4.8% y/y in June; May new home sales fell 5%; the June PMI rate fell to 47.0; June vacancies fell 3.7% m/m and 8.2% y/y; May building approvals were off 6.5%; May retail sales rose 0.7%; June vacancies fell 3.7%; the RBA commodity prices index jumped 7.9% in June; and the May trade balance printed at –A$ 965 million.