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USD – The USD saw a course of risk reversal last week losing 1.1% (DXY) vs. the 16 most traded majors early in the session, but then experienced an about face as it added almost 2% by Fridays close (77.50 – 79.10). Much of the volatility in the dollar was due to the mixed bag of data received by the markets starting with Monday's ISM Manufacturing reading for July (48.9 vs. prior 44.8) showing some recovery in the sector. Total Vehicle Sales also showed a modest boost in July lead by Ford (11.3M vs. prior 9.7M/Domestic Sales 8.4M vs. 7.2M). Pending Home Sales saw improvement as well posting a 2.9% gain in June (3.6% vs. prior 0.1%). All of which beat analysts estimates, however, they were countered by lagging Personal Income (1.3% June vs. prior 1.4%) followed by a dip in Personal Spending (0.1% June vs. prior 0.3% and the major economic benchmark employment readings; Initial Jobless Claims for June 588K vs. prior 584K. Other sanguine data included a drop in Factory Orders in June (1.1% vs. prior 1.2%) and a modest drop in the service sector with ISM Non-Manufacturing Composite falling to 46.4 in July from a previous reading of 47.0. On the horizon for this week are: Wholesale Inventories, Consumer Confidence, Continuing Jobless Claims & the FOMC rate decision on Wednesday. The later is expected to remain unchanged at 0.25%. Expect a range bound USD ahead of data.

EUR – The euro slid after last week's upbeat US jobs report and lower unemployment rate, stirring hopes that the US economy may finally emerge from recession. The euro's drop following better economic news is a departure from the recent trend of dollar weakness as risk appetite improves which had fueled the euro's climb. An end to this correlation suggests the market's focus would return to comparative economic performance, a potentially dollar positive event under the scenario of the US economy emerging more quickly from recession. Markets will continue to monitor this correlation and for which economy is emerging from recession faster for further clues on euro direction.

JPY – Last Friday, the Japanese yen skidded on hopes of a global recovery, which dampened demand for safe haven currencies. Positive U.S. jobs numbers encouraged investors to buy higher-yielding assets. The yen is expected to trade within recently ranges as traders take on more risk. The Bank of Japan is expected to keep interest rates steady tomorrow.

GBP – Sterling losses continued into today, falling to lows at $1.6475 from last week's peaks above $1.70. Investors sent the pound lower following last week's surprise BoE decision to expand quantitative easing as the economy shows hopeful signs of a turnaround. Manufacturing PMI at 50.8 in July climbed above the 50 threshold separating growth from contraction while industrial production rose 0.5% in June stirred hopes of a turnaround. The BoE decision to expand quantitative easing to GBP 175 billion from GBP 125 billion is weighing on the pound amid concerns that increased government spending will heighten inflation.

CAD – The Loonie reversed its recent ascension vs. the USD last week posting a 2.1% decline for a two week low of 1.0862 (1.0642 – 1.0862). The week began with precipitous drop to an 11-month high vs. the USD of 1.0642 lead by a charge in crude oil reaching its apex on Friday at $72.42 per barrel. Crude oil has since sold off back down below $72.00 to where it currently hovers at $71.12 as of this writing. The Loonie was also assisted by better corporate earnings which prompted investors to seek riskier assets. However, like its US counterpart unemployment looms in the face of recovery with Priminister Stephen Harper warning of continued job losses in the coming months. Finance Minister Jim Flaherty stated last week that he's concerned about the Canadian Dollars “rapid” appreciation and said there are steps the central bank could take to damp its rise. Expect the Loonie to continue to proxy with equities and crude oil as it awaits US data this week.

MXN – The beleaguered Peso also reached a 10-month high of 12.9539 vs. the USD for its first penetration, in so many months, of the psychologically significant 13.00 barrier and was the second best performer vs. the USD. However, bearish sentiment still lingers for the Peso. Foreign-exchange traders are losing faith that Mexican President Felipe Calderon will push through the tax increases needed to rein in the budget deficit and stem a rout that has made the peso the worst-performing major currency in the past year. Many analysts feel Mexico's economy is heading on an unsustainable path amid rising deficits as oil output declines. Expect the Peso to remain supported by positive US data and strong crude oil.

CNY – The Chinese yuan is trading near 6.8346 amid broad dollar strength. A Chinese official said China's loose monetary policy would end next year as consumer and producer prices were return to positive. Marketing are forecasting a 0.67% rise in the yuan in 12-ms.