USD - Last week the USD rose to a four-year high of 1.2146 against the EUR, finishing out the week around 1.24 as market participants rushed to cover short positions. This week's data release calendar appears somewhat light. We are due to get a few Fed speeches, most notably Bernanke speaking on Wednesday. Today, Existing Home Sales came in much above expectations at 7.6%. Consumer Confidence measures should surprise on the upside, with increases in both the University of Michigan and Conference Board Confidence. Additionally, an upward revision in GDP to 3.4% is in the cards, as a result of stronger private consumption. Moreover, we will get data for durable goods orders for April. The FOMC minutes from the 27-28 April meeting confirmed the picture of an overall dovish central bank. The committee's major concern remains the risk of inflation falling to uncomfortably low levels.

EUR - Eurozone markets are likely to remain volatile with no real let up in terms of the concerns surrounding the economy. Last week, German Chancellor Merkel said that the euro is in danger and that it is necessary to develop a process for orderly state insolvency. It was not exactly what the FX market was looking for. The rapid decline in the euro has sparked speculation that the G7 countries or just the ECB are preparing to intervene in the FX market. Most researchers including the IMF point to a fair level for EUR/USD close to or below the current level. Consequently, intervention appears unlikely, not least as it would run counter to the current loose ECB monetary policy. However, we could, in the near future, see G7 or central bank comments regarding the undesirability of excess volatility in FX markets. This week there is little to focus on in terms of Eurozone data, though confidence indicators from the main economies are worth noting. A host of ECB speakers are also scheduled to speak over the week.

GBP - This morning the GBP rose the most against the euro in almost two weeks as the U.K.'s Chancellor of the Exchequer George Osborne outlined budget cuts to shrink the largest government budget deficit among G-7 nations. Osborne, who took office on May 11, announced 6.25 billion pounds ($9 billion) in reduced spending and will set out broader plans in an emergency budget on June 22. The U.K.'s deficit was equal to more than 11% of gross domestic product in the fiscal year that ended in March. On the UK data front, revised Q1 GDP are due for release on Tuesday, with a slight upward revision expected as, for instance, better than anticipated Manufacturing Output and Business Investment Data are taken into account. Other UK data include the latest Nationwide house price index and the CBI distributive trades report for May. The BoE's Posen is also due to speak over the week, with his comments likely to attract attention given his recent expressions of concerns about UK inflation.

JPY - The Japanese yen is range-trading as it awaits further news from Europe and the global economy. The Japanese government is paying close attention to the European debt crisis; however it is more concerned with global recovery. Overall, the government's assessment on the economy is that it is picking up steadily, and the Bank of Japan's sees the economy as starting to recover moderately. This week will see data releases on Japan's exports and household spending.

CAD - The Canadian dollar traded with steady growth as strong economic data gives way to optimism for rate increases as a possibility. Considerable strength in the economy was due to Canada's consumer prices which came in higher than expected in April at 1.8%, up from 1.4% in March, mainly due to rising gasoline prices. Retail prices gained 2.1% in March to a record C437 billion ($35B) with strong economic data emanating from Statistics Canada, the BOC is pressured to raise interest rates this June.

MXN - The Mexican peso dropped almost 3% this past week as Europe's sovereign debt crisis drove investors away from high-yielding emerging market assets. As expected, Mexico's central bank held its benchmark interest rate unchanged at 4.5% for a ninth consecutive meeting as inflation appears to remain under control. The country's annual inflation fell to 3.39% in May from 4.27% in April; however, central bank forecasts inflation to rise as much as 5.25% by the end of the year, suggesting that rate hikes may not occur until then. With crude oil close to a yearly low and fear remaining in the global markets, the peso should stay between a broad and volatile range of April lows and May highs this week.

AUD - The Australian dollar took the biggest loss this week, dropping over 6% against the dollar and 8.4% against the Japanese yen. Fear drove the markets this week as a mounting concern on Europe's sovereign debt crisis sparked a selloff in stocks, commodities, and currencies tied to growth. As markets calmed this morning, the Australian dollar recovered from a 10 month low, supported by a rise in Chinese stocks. Ahead this week, Westpac Leading Index is scheduled for release on Wednesday and Private Capital Expenditures on Thursday.