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EUR/USD EUR/USD rebounded somewhat last week after the previous week's selloff. The rate was buoyed by a tentative agreement for a bailout of Spanish banks, nevertheless, Fitch's downgraded Spain's credit rating by three notches to BBB. Also, the G7 held an emergency meeting to discuss the crisis and the ECB left rates unchanged. The week began on a positive note, with the rate rising off of its weekly low of 1.2494 after news of lower Spanish Unemployment claims and U.S. Factory Orders, which dropped by -0.6% m/m, versus an expected increase of +0.3%. The pair then weakened on Tuesday as an emergency meeting of the G7 was held to discuss the European crisis with Greece and Spain at the top of the agenda. Also pressuring the rate was S&P giving Greece a one in three chance of leaving the EZ after the June 17^thelection. Economic numbers had U.S. Non-Manufacturing PMI come out at 53.7 as widely anticipated also, EZ Retail Sales, which declined by -1.0% m/m versus an expected decline of -0.1% and German Factory Orders, falling by -1.9% m/m, versus an expected decline of -1.0%. The rate then rallied on Wednesday after the ECB left its benchmark Minimum Bid Rate unchanged at 1.0% as widely expected. After the rate announcement, ECB President Draghi stated that, "On a quarterly basis, euro area real GDP growth was flat in the first quarter of 2012. Available indicators for the second quarter of the year point to a weakening of growth and highlight prevailing uncertainty. Looking beyond the short term, we continue to expect the euro area economy to recover gradually." The rate then made its weekly high of 1.2625 on Thursday after positive results from bond auctions in France and Spain. The pair then sold off after Fitch's downgraded Spain's credit rating to BBB and comments from the Fed's Bernanke in testimony before the Joint Economic Committee, in which he stated, "European policymakers have taken a number of actions to address the crisis, but more will likely be needed to stabilize euro-area banks, calm market fears about sovereign finances, achieve a workable fiscal framework for the euro area, and lay the foundations for long-term economic growth." The pair continued sliding on Friday despite the U.S. Trade Balance, which came out showing a deficit of -50.1B, versus an expected -49.4B. EUR/USD went on to close the week at 1.2516, showing an overall gain of +0.7%.

USD/JPY USD/JPY gained significantly last week as asset flows favoured the U.S. Dollar and despite a better than expected GDP number out of Japan. The rate began the week on a positive note, trading higher after making its weekly low of 77.98 on Monday after a speech by BOJ Governor Shirakawa, in which he stated, "we are hoping that 1 percent inflation, specified as the Bank's 'price stability goal in the medium to long term' for the time being, is achieved at the earliest possible time. However, there are structural and corrosive problems behind the cause of deflation." The pair continued higher on Tuesday and Wednesday as the United States reported mixed economic data. On Thursday, the rate made its weekly high of 79.79 after testimony by Ben Bernanke on the Hill. The rate then declined on Friday after Japan announced Final GDP had increased by +1.2% q/q, versus +1.1% expected, and the Japanese Current Account showing a surplus of +0.29T, versus +0.62T expected.USD/JPY went on to close at 79.45, showing a gain of +1.8% from its previous weekly close.  

GBP/USD GBP/USD gained ground last week as the BOE left rates unchanged and both countries reported mixed economic data. The week began on a positive note with Cable rising modestly as the United States reported weaker than expected Factory Orders. The rate then made its weekly low of 1.5320 on Tuesday as the G7 met to discuss the European situation and Spain's credit rating was downgraded. On Wednesday, the pair shot up as the ECB left its benchmark rate unchanged and UK Construction PMI came out with a reading of 54.4 as was expected. Cable then made its weekly high of 1.5599 on Thursday after the BOE left its benchmark Official Bank Rate unchanged at 0.50% and the Asset Purchase Facility at 325B. Also out was the BRC Retail Sales Monitor, which rose by +1.3% y/y, versus a previous reading of -3.3%, and the Halifax HPI, rising by +0.5% m/m, versus an expected increase of +0.3%. The rate then sold off on Friday after UK PPI Input came out at -2.5% m/m, versus -1.2% expected. GBP/USD went on to close at 1.5468, with an overall gain of +0.7% from its previous weekly close.
 

AUD/USD AUD/USD gained significantly last week as Australia reported mixed economic data and despite the RBA lowering the Cash Rate another quarter point. The week began on a positive note with the rate trading higher after making its weekly low of 0.9627 on Monday after Australian ANZ Job Advertisements declined by -2.4% m/m, versus a previous reading of -0.8%, and Australian Company Operating Profits, which dropped -4.0% q/q, versus an expected decline of -2.1%. The rate then shot up on Tuesday after the RBA lowered its benchmark Cash Rate 25 bps to 3.5% from 3.75%. RBA Governor Stevens stated after the rate announcement, "Financial market sentiment has deteriorated over the past month. The Board has noted previously that Europe would remain a potential source of adverse shocks. Europe's economic and financial prospects have again been clouded by weakening growth, heightened political uncertainty and concerns about fiscal sustainability and the strength of some banks." The rate continued sharply higher on Wednesday after Australian GDP increased by +1.3% q/q, versus an expected increase of only +0.5%. On Thursday, the pair made its weekly high of 1.0001 before trading lower after Australian Employment Change came out showing an increase of +38.9K, significantly higher than the decline of -2.2K that was expected, while Australian Unemployment rose a notch to 5.1%. The rate then rose somewhat on Friday after the Australian Trade Balance came out showing a deficit of -0.20B, versus an expected deficit of -0.92B, and Australian Home Loans, up +0.2% m/m, versus an expected increase of +0.1%. AUD/USD went on to close at 0.9914, with a gain of +2.2% for the week.

USD/CAD USD/CAD lost ground last week as the BOC left interest rates unchanged and despite Canada reporting weaker than expected economic data. The week began on a positive note, with the rate making its weekly high of 1.0445 on Monday despite weaker than expected U.S. Factory Orders. On Tuesday, the rate began dropping after the BOC left its benchmark Overnight Rate unchanged at 1.0% and despite Canadian Building Permits declining by -5.2% m/m. In the post rate announcement, BOC Governor Carney stated that, "Financial market sentiment has deteriorated over the past month. The Board has noted previously that Europe would remain a potential source of adverse shocks. Europe's economic and financial prospects have again been clouded by weakening growth, heightened political uncertainty and concerns about fiscal sustainability and the strength of some banks." Wednesday saw the rate continue dropping as risk appetite increased in the wake of the ECB rate decision. The pair continued lower on Thursday, making its weekly low of 1.0209 after the Canadian Ivey PMI came out at 60.5, versus an expected reading of 53.5. The pair then rose sharply on Friday after Canadian Employment Change came out at +7.7K, versus an expected +10.0K while the Canadian Unemployment Rate held steady at 7.3%, and Canadian Housing Starts, which increased by +211K, versus +226 expected. Also out was the Canadian Trade Balance, widening to a deficit of -0.4B, versus an expected surplus of +0.2B. USD/CAD went on to close the week at 1.0259 with an overall loss of -1.5% from its previous weekly close.
 

NZD/USD NZD/USD rose last week with virtually no significant economic data out of New Zealand and with mixed numbers out of the United States. The week began on a positive note with the rate rising after making its weekly low of 0.7498 on Monday. On Tuesday, the rate consolidated at a slightly higher level as the RBA lowered its benchmark Cash Rate. On Wednesday, the pair rose significantly as risk appetite increased in the market after the ECB rate decision. The rate then made its weekly high of 0.7750 on Thursday before selling off. The pair then rose on Friday before closing the week at 0.7697, showing an overall gain of +2.1%.