Overall: The dollar dropped against most of the other major currencies on Friday completing a week that saw the greenback move lower each day. Optimism that the global economy is slowly recovering, leading traders to abandon the dollar as a safe haven as risk tolerance increased, gave way at the end of the week to speculation that the U.S. creditworthiness has deteriorated to point that the U.S. may eventually lose its AAA credit rating. The credit rating dilemma came to the forefront after S&P downgraded the U.K. economic outlook this week and said that the U.K.’s AAA rating is under scrutiny. The dollar index declined 0.9%, falling below the 80.00 level to 79.81, the lowest since the end of 2008.

The talk about the U.S. losing its AAA credit rating has rattled investors although the likelihood of the occurrence, at least in the short term, is low. Investors are starting to think about the consequences of such a move. We saw the effect the S&P downgrade of the U.K. economy had on the financial markets and the reaction to a U.S. downgrade would be substantial and longer lasting. Stocks will likely move lower as would the dollar and gold would likely rise.

The Euro (Eur/Usd) The euro moved higher again on Friday, gaining more than 100 pips and closing just below the 1.4000. The pair had broken above the 1.4000 level intraday, reaching 1.4050 before retreating. The pair gained more than 500 pips for the week as the dollar weakened across the board. Concerns about the U.S. creditworthiness adds another reason for traders to move away from the greenback, pushing the majors higher, 
The Pound (Gbp/Usd) Despite the U.K. economic outlook being downgraded by S&P this week, cable gained every day and posted a 750 pip gain. On Friday the pair again moved higher gaining another 85 pips and closing above the 1.5900 level. The U.K. revised GDP figures showed that the economy contracted by 1.9% as the preliminary released projected.

The Aussie (Aud/Usd) Despite U.S. equity markets closing lower on Friday, the aussie managed to post a gain of approximately 50 pips as the dollar continues to take a beating. Gold prices posted a modest gain on Friday closing above $957 an ounce. The aussie closed the week trading above the 0.7800 level and moving further above all of the daily simple moving averages.

The Cad (Usd/Cad) Traders continue to sell the dollar as a possible rebound in global economic growth diminishes the need for a safe haven. The Canadian dollar strengthened against the greenback again on Friday, helped by oil prices closing slightly higher, above the $61 a barrel level. The cad closed the day below the 1.1200 level after losing 170 pips on the day. 

The Swissy (Usd/Chf) The swissy moved lower again on Friday as the dollar continues to weaken in broad market. The pair lost approximately 80 pips on the day, closing just above the 1.0850 level. There were no Swiss economic releases on Friday
The Yen (Usd/Jpy) The Japanese yen was the one currency that the dollar strengthened against on Friday. U.S. equity markets struggled to move higher and finally closed the day lower but the Japanese currency was unable to strengthen. The pair gained 75 pips on the day closing near the 94.75 level after breaking below the 94.00 level intraday.