USD - The dollar remains well entrenched within its recent ranges ahead of key central bank meetings and major economic data releases due later this week. Last week's disappointing reading of Q2 US GDP - dropping to 1.5% from 2.0% in the previous reading - supports further monetary easing from the Fed and possibly the announcement of another round of QE. While weaker consumer spending was the primary reason for the slowdown, a drop in exports subtracted 0.31% from economic growth in the first half of the year. Policymakers may be gauging weather the recent "soft patch" is temporary, but the depreciative effects of quantitative easing on the USD would surely be supportive of the US manufacturing sector as overseas demand eases. Reinforcing this notion, an index of Dallas area manufacturing activity came in at ? 13.2 versus an expected reading of +2.0. For the week ahead, investors will take note of personal spending and income, Chicago PMI, and consumer confidence on Tuesday. Wednesday sees the release of ISM manufacturing, construction spending, ADP employment change and the much anticipated FOMC rate decision. The week wraps up with weekly jobless claims and factory orders on Thursday and ISM non?manufacturing, unemployment and the all?important nonfarm payrolls report due on Friday. While further Fed easing would be a negative for the USD, any resulting weakness will likely remain limited as the world's other major central banks appear to be gearing up for similar easing programs.

EUR - The euro fell back to the lower end of its well?worn ranges this morning as investors suspect that Eurozone officials are set to ease monetary policy later this week. ECB President Draghi sparked a global rally last week when he voiced his opinion that the common currency was "irreversible" and pledged the Bank's support for struggling EU nations. With the market squarely focused on the Bank's next move with their monthly meeting set to wrapup this Thursday, Draghi has been working overtime to get key regional policymakers on board with further monetary easing. The ECB President reportedly met over the weekend with German Finance Minister Schauble and Bundesbank President Weidmann, both critics of the ECB's past sovereign debt purchases. Draghi has substantial hurdles to overcome as there is a growing divide amongst German policymakers with a faction of Chancellor Merkel's coalition advocating that the central bank's actions blur the lines between monetary and fiscal policy. An anonymous ECB official also said that further interest rate cuts and another LTRO program will be discussed.

GBP - The pound fell back from its recent highs overnight on new signs of British economic weakness. UK mortgage approvals declined in June by more than expected, falling to 44.2K from 50.5K in the previous reading. As such, sterling pulled back from a five?week high against the USD with weak economic fundamentals continuing to weigh. For the week ahead, investors will take note of PMI manufacturing, construction and services due
on Wednesday, Thursday and Friday respectively. The BoE also concludes its monthly meeting on Thursday with no change expected to either interest rates or the size of its asset purchase program.

JPY - The yen surged back towards the top of its recent ranges overnight despite a rebound in global equity markets. With the Fed and ECB both positioned to ease policy later this week, the case against holding yen will be even further diminished as global interest rates converge near 0%. While central bank meetings will take center stage this week, investors will also take note of Japanese unemployment data due later this afternoon.

Commodity Currencies - The commodity linked currencies extended their recent gains over the weekend as expectations of global central bank stimulus provide support for the high?growth group of currencies. The CAD reached a fresh two?month best against the USD in early trading as suspected Fed stimulus measures will provide support for Canadian exports. Unlike its G10 counterparts, the BoC has remained the lone major central bank to avoid further monetary easing. However, with a GDP report due on Tuesday expected to show that the Canadian economy is slowing, the Bank may turn more dovish in the months ahead. While the loonie has posted strong gains against the USD and EUR, it trails the success of its
commodity?linked counterparts falling to a fivemonth low against the AUD. The Aussie remains near a four?month best against the USD as its G10?leading yields and relatively stable performance attract investors.

MXN - The Mexican peso gained over 3% against the USD since last week as risk appetite recovered on positive US growth. News of a better than expected US GDP data was positive for the peso as Mexico sends 80% of its exports to the US. Last week, the market saw Mexico's bi?weekly CPI gain 0.39% vs. the previous 0.25%. Trade balance for June gained 601.60m from the previous 362.70m and ?100m expected.
RMB - USD/CNY fixing came in at 6.3303 stronger than the previous reading of 6.3325. The Shanghai composite index closed down 0.9% to 2,109.91, the lowest level since March 2009, as concern over earnings growth overshadowed speculation that European policy makers will take action to ease the Euro Zone crisis. CNH held between 6.3825 ? 6.3850 after Yi Gang, head of China's State Administration of Foreign Exchange, stated last week that China's foreign exchange reserves had stayed at a steady level over the past year, reiterating that the countries cross?border
capital inflows and outflows are close to being balanced.