The euro depreciated vis-à-vis the U.S. dollar last week as the single currency tested bids around the $1.3440 level and was capped around the $1.3785 level. The pair lost about 315 pips last week. Major central banks including the Fed and ECB enacted an emergency 50bps rate cut. The U.S. Treasury may take ownership in some U.S. banks. Group of Seven officials convene in Washington, D.C. this weekend. The Fed created a Commercial Paper Funding Facility. The Fed’s Term Auction Facility will be US$ 900 billion through the end of the year. The G7 meets this weekend and strong language is expected in its communiqué. Some traders expect a temporary blanket guarantee of depositors’ funds.

The ECB called on the EU to enact a coordinated financial stability scheme. The ECB may reduce its 2009 GDP forecast and Germany make take its 2008 growth forecast to 0%. The French government may establish an entity to take over failed banks. ECB officials noted inflation is high but called for a coordinated global intervention.

Data released in the U.S. last week saw weekly initial jobless claims fall 20,000 to 478,000 with continuing claims higher at 3.659 million; August pending home sales rose 7.4% m/m and 8.4% y/y; the U.S. trade gap fell 3.5% to US$ 59.1 billion; and September import prices were off 3.0%.

Data released in the eurozone last week saw the German August trade surplus fall 2.5% y/y; German wholesale September prices were off 0.6% m/m and were up 5.8% y/y; German industrial output climbed 3.4% m/m; EMU-15 GDP growth was confirmed at -0.2% q/q; and German manufacturing orders were up 3.6% m/m.

The yen appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the ¥97.90 level and was capped around the ¥105.15 level. The pair lost about 560 pips last week. The Nikkei 225 stock index lost 9.62% to close at ¥8,276.43. The government may formulate another stimulus package by month’s end. Bank of Japan didn’t cut rates but said it “strongly supports” other central banks’ measures. BoJ cut its assessment of corporate capital spending. BoJ’s Shirakawa cited more “downside risks.” Japan is proposing an IMF-led scheme to use foreign reserves to bail out troubled countries.

Data released in Japan last week saw August core private machinery orders fall 14.5%; the September economy watchers survey fell for the sixth consecutive month to 28.0; the August coincident indicator fell to 100.7; the September M3 money supply was up 0.9% y/y; and September outstanding bank loans were up 1.6% y/y.

The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8357 in the over-the-counter market.
In Chinese news, PBoC reduced its one-year benchmark lending and deposit rates by 0.27%. PBoC pledged to maintain yuan stability.

The British pound depreciated vis-à-vis the U.S. dollar last week as cable tested bids around the US$ 1.6790 level and was capped around the $1.7715 level. The pair lost about 735 pips last week. BoE MPC cut its Bank Rate by 50bps to 4.5%. The U.K. government may invest up to ₤50 billion in the banking system and will guarantee more funds to encourage interbank lending.

Data released in the U.K. last week saw the U.K. goods trade deficit narrowed to -₤8.198 billion; Halifax September house prices fell 1.3% m/m and 12.4% y/y; September shop price inflation fell to 3.6% y/y; Nationwide September consumer confidence fell to 50; and August manufacturing production fell 0.4% m/m and 1.9% y/y.

The Swiss franc appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the CHF 1.1125 level and was capped around the CHF 1.1485 level. The pair lost about 10 pips last week. SNB reduced its Libor target rate by 50bps.

Data released in Switzerland last week saw the September unemployment rate remain unchanged at 2.4%.

The Canadian dollar depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the C$ 1.1980 level and was supported around the C$ 1.0810 level. The pair gained about 1,020 pips last week. BoC cut rates by 50bps. Prime Minister Harper faces a difficult election on Tuesday.

Data released in Canada last week saw September housing starts climb to 217,600 and 107,000 new jobs were created in September.

The Australian dollar depreciated vis-à-vis the U.S. dollar last week as the Aussie tested bids around the US$ 0.6450 level and was capped around the US$ 0.7735 level. The pair lost about 1,180 pips last week. RBA cut rates by 100bps to 6.0%.

Data released in Australia last week saw September employment rise 2,200 and October inflation expectations were unchanged at 4.4%.