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EUR/USD EUR/USD extended its previous week's losses last week as the United States reported lower than expected economic data and Spain agreed to make further spending cuts to meet its fiscal target ahead of requesting financial assistance from the ESM/EFSF. The week began with the rate dropping after making its weekly high of 1.2979 on Monday after a meeting between Germany's Merkel and France's Hollande over the weekend, failed to yield an agreement on a banking union. Also weighing on the pair was German Ifo Business Climate, which declined to 102.3 from 103.2, with an expected print of 102.7. The rate continued losing ground on Tuesday after Greece announced it would need to roll over its debts or raise additional short-term debt in order to narrow its budget gap. Tuesday's numbers had U.S. CB Consumer Confidence drop to 60.6, versus a reading of 65.8 expected, and GfK German Consumer Climate came out with a reading of 5.9 in line with expectations. On Wednesday, the pair extended its losses as protests in Madrid and uncertainty over Spain pushed 10-year Spanish bond yields back over 6%. Economic data for Wednesday included U.S. New Home Sales dropping to 373K, versus an expected 381K, and German Preliminary CPI, which came out with a flat reading as widely expected. The rate then reversed direction, trading higher on Thursday after making its weekly low of 1.2828 as U.S. Durable Goods Orders dropped a whopping -13.2% m/m, versus a decline of -4.7% expected, while the headline number declined by -1.6%, versus an expected increase of +0.2%. Also out were U.S. Final GDP, which grew by only +1.3% q/q, versus an expected +1.7%, and U.S. Pending Home Sales, dropping by -2.6% m/m, versus -0.4% expected. The pair then resumed its decline on Friday as German Retail Sales came out with an increase of only +0.3% m/m, versus +0.5% expected. EUR/USD went on to close at 1.2858, showing an overall loss of -0.9% for the week. After the market close, an independent bank stress test of Spanish banks found a capital deficit of €59.3B, with Bankia Group showing a deficit of €24.7B.

USD/JPY USD/JPY continued weakening last week as Japan reported mixed economic data while the United States reported lower than expected numbers. The week began with the rate trading off of its weekly high of 78.16 made on Monday, after the BOJ Monetary Policy Meeting Minutes showed the central bank would increase its stimulus program if conditions warranted and that, "Regarding risks to the economic outlook, there remains a high degree of uncertainty about the global economy, including the prospects for the European debt problem, the momentum toward recovery for the U.S. economy, and the likelihood of emerging and commodity-exporting economies simultaneously achieving price stability and economic growth." On Tuesday, the pair consolidated at a slightly lower level despite U.S. CB Consumer Confidence showing a favourable reading. The rate continued declining on Wednesday after a disappointing U.S. New Home Sales number. Thursday saw the pair continue pressured after the United States reported a weaker GDP, Retail Sales and Pending Home Sales numbers. The rate then recovered somewhat on Friday after Japanese Tokyo Core CPI declined -0.4% y/y, versus -0.2% expected, while Japanese Preliminary Industrial Production declined by -1.3% y/y, versus -0.4% expected. Nevertheless, Japanese Household Spending increased by +1.8% y/y and Japanese Retail Sales grew by +1.8% y/y, significantly higher than the decline of -0.3% that was expected, bringing USD/JPY to close at 77.92, with an overall loss of -0.3% from its previous weekly close.

GBP/USD GBP/USD closed marginally lower last week as the UK reported mixed economic numbers and U.S. data showed continued weakness. The week began on a soft note with Cable dropping somewhat in the absence of any significant economic data out of either country. The rate continued under pressure on Tuesday after a positive U.S. CB Consumer Confidence number and despite UK BBA Mortgage Approvals increasing to +30.5K, versus an expected +28.4K. The pair continued heading south on Wednesday as UK CBI Realized Sales came out with a reading of 6, in line with expectations. On Thursday, Cable recovered, trading higher after UK Final GDP showed a -0.4% contraction q/q, versus -0.5% expected, while the UK Current Account showed a deficit of -20.8B, versus -12.3B expected. Also supporting the rate were dismal U.S. Retail Sales and Final GDP data. Cable then traded with volatility on Friday, making both its weekly low of 1.6112 and weekly high of 1.6271 after Fitch's reiterated its AAA rating on UK sovereign debt, but continued giving the country a negative outlook. The ratings agency in its report mentioned the likelihood of a downgrade had increased, stating that "Global economic headwinds, including those emanating from the on-going Eurozone crisis, have compounded the drag on UK growth from private sector deleveraging and fiscal consolidation as well as from depressed business and consumer confidence, weak investment, and constrained credit growth. Fitch now expects the economy to contract by 0.3% in 2012 compared to an expectation of growth of 0.8% when the UK sovereign rating was last formally reviewed in March 2012." GBP/USD went on to close at 1.6164, showing an overall loss of -0.4% for the week.

AUD/USD AUD/USD continued losing ground last week as lower than expected numbers out of the United States put significant pressure on risk assets. The week began with the rate softening as the Greenback strengthened against other majors and in the absence of any significant economic data out of either country. The pair continued weakening on Tuesday as the RBA published its Financial Stability Review; the review noted that, "Along with the weaker near-term outlook for global growth, the euro area problems will continue to pose heightened risks to global financial stability in the period ahead." The pair continued weakening on Wednesday, making its weekly low of 1.0327 as gold and silver prices also made their weekly lows. The rate then reversed direction, trading higher on Thursday after the United States reported lower than expected Retail Sales and Final GDP. On Friday, the pair resumed its slide after making its weekly high of 1.0473 after Australian Private Sector Credit increased by only +0.2% m/m, versus +0.3% that was expected. AUD/USD went on to close at 1.0376, showing an overall loss of -0.7% from its previous weekly close.

USD/CAD USD/CAD extended its rally last week as the Greenback strengthened despite dismal U.S. economic numbers and better than expected economic data out of Canada. The week began on a positive note, with the rate moving higher on Monday in the absence of any significant economic data releases out of either country. The rate then made its weekly low of 0.9755 on Tuesday after Canadian Retail Sales increased +0.7% m/m, versus +0.2% expected, while the headline number increased +0.4% m/m, versus +0.3% expected. The rate then continued higher after a positive U.S. CB Consumer Confidence number. The pair continued higher on Wednesday, making its weekly high of 0.9858 despite a lower than expected U.S. New Home Sales release. The rate then fell sharply on Thursday after dismal U.S. Retail Sales and GDP data were released. On Friday, the pair recovered despite Canadian GDP growing by +0.2% m/m, versus an expected +0.1% rate of growth, bringing USD/CAD to close at 0.9835, with an overall gain of +0.8% for the week.

NZD/USD NZD/USD continued treading water last week, again showing very little change after trading with volatility over the course of the week. The pair began the week trading sharply lower and making its weekly low of 0.8181 on Monday, as asset flows favoured the Greenback and in the absence of any significant economic data out of either country. The pair then consolidated on Tuesday after a positive U.S. CB Consumer Confidence number. On Wednesday, the rate began trading higher after the United States reported weaker New Home Sales. The pair then rose sharply on Thursday after New Zealand NBNZ Business Confidence printed at 17.0, versus a previous reading of 19.5 while the United States released disappointing economic data. The pair then made its weekly high of 0.8354 on Friday before selling off on position squaring bringing NZD/USD to close at 0.8295, showing an overall gain of 7 pips from its previous weekly close.