The euro depreciated vis-Ã -vis the U.S. dollar last week as the single currency tested bids around the $1.4630 level and was capped around the $1.4910 level. The pair lost about 205 pips last week. Early U.S. holiday retail sales look to be fairly robust. Fed's Kohn cited elevated turbulence from the credit shock and said policymaking must be flexible, pragmatic, and nimble. Philly Fed's Plosser hawkishly said lowering rates won't solve the markets' problems. The Fed's Beige Book cited decelerating GDP growth, relatively soft retail spending, and a quite depressed real estate sector. Fed boss Bernanke said the Fed is exceptionally alert and flexible and sees headwinds for consumers.

Market chatter suggests EMU-13 GDP growth may slow in 2008. ECB's Ordonez sees GDP growth as having peaked. Germany's export association is halving 2008 GDP growth forecasts. Germany sees 2008 growth around 2.0%. ECB's Papademos sees slower growth and higher inflation. ECB's Tumpel-Gugerell sees 2008 GDP growth around 2%. ECB's Quaden sees policymaking as being data-dependent. ECB's Stark seeks solid growth and higher inflation risks. ECB's Bini Smaghi said the ECB favours a strong euro. ECB's Garganas said the euro's recent moves have been sharp and abrupt. Buba sees 2007 and 2008 GDP growth around 2.5% and 2.0%, respectively. ECB's Liebscher sees upside risks prevailing.

Data released in the U.S. last week saw the Chicago Fed's National Activity Index fall to -0.73; November consumer confidence worsened to 87.3; October new durable goods orders fell 0.4% and the non-defense capital goods ex-aircraft component was off 2.3%; October existing home sales were off 1.2% m/m; October building permits were downwardly revised to -7.2% ; Q3 GDP were upwardly revised to 4.9%; weekly initial jobless claims were up 23,000 to 352,000; October existing home sales were up 1.7% and down 23.5% y/y; October construction spending was off 0.8%; October private spending was off 0.8%; Chicago November PMI improved to 52.9 with the prices paid component up; October consumer spending was up 0.2%; October personal incomes were up 0.2%; and core PCE were up 0.2% and 1.9% y/y.

Data released in the eurozone last week saw German November CPI was up 3.0% y/y; the German November Ifo business climate index improved to 104.2; the German GfK climate index fell to 4.3 in November; EMU-13 money supply growth accelerated to 12.3%; German October wholesale sales were up 0.6% m/m and 1.8% y/y; Q3 EMU-13 GDP was up an annualized 2.7%; and EMU-13 November provisional HICP was up 3.0%.