USD - Disappointing US data weighed on the USD. Central banks' concerns about global slowdown also weighed on markets as individual monetary policy makers in the major economies indicated that, in their views, not only do current accommodative policies look set to remain in place for some time
yet, but policy could be eased further if economic conditions warrant. This week's data releases will give further indications as to the level of the US slowdown.

The Q2 GDP growth data is expected to be revised to just 1.5%, down from the Q1 growth rate of 3.7%. The level of new jobless claims will
be of particular interest after it hit 500,000 in the most recent week. Meanwhile, existing homes sales are anticipated to show a 13% decline and new home sales are anticipated to remain flat. The final August Michigan consumer sentiment reading and July durable goods orders are expected to rebound.

EUR - Euro is near 5-week lows vs. the dollar as the Eurozone also show signs of moderating. The single currency dipped to lows at $1.2673 vs. the dollar overnight as the Eurozone Purchasing Manager's Index (PMI) slipped to 56.1 in August from 56.7 previously. Though well above the 50 level

separating growth from contraction, the PMI report suggested the European recovery was moderating. The report also highlighted the growing divergence between France and Germany as anchors of growth on the one hand, and the other member countries which are stagnating. With pressure on both countries to drive growth, there appears little margin for error that will likely keep the euro on the defensive.

GBP - While sterling broached the 1.5500 level last Friday (1.5475), it has rebounded back into the 1.5620 range this morning despite a lack of economic news. Speculative positions moved back to a net short position as the longs have lost confidence in the GBP. This week's key data will come on Friday. Second quarter GDP, expected to come in at 1.1%, will show whether consumption slowed and if the trend in net exports was as disturbing as earlier numbers showed. While there are not a lot of other
headline releases in the UK, the pair will certainly trade off of US releases. Thus, look for the pair to be more volatile this week with another test of 1.5500 in the offing.

JPY - The long awaited meeting between Japanese Prime Minister Kan and the Governor of the Bank of Japan, Mr. Shirakawa, finally took place earlier today via phone. The fact that it took place via phone undermines the importance of the meeting and puts into jeopardy any real prospect of yen intervention in the foreseeable future. The yen traded at a 7-week high against the EUR on the back of the news. Mr. Kan and Mr.Shirakawa vowed that they would work closely together on economic and monetary policy, but this was cosmetic, not authoritative.

Mr. Yoshito Sengoku, the Chief Cabinet Secretary, said of the meeting that Mr. Kan and Mr. Shirakawa exchanged views on the economic and financial situation, including foreign exchange. They agreed that it was important for the government and the BOJ to communicate closely with each other. Mr. Sengoku then went on to say that there was no agreement on the topic of intervention. Look for the unchecked JPY to continue its run in the near to medium term.

CAD - The loonie received a lift after a higher opening in Canadian equity markets amid talk of potential mergers and moderate gains in crude oil, Canada's largest export. Last week, the loonie fell after sluggish North American economic data, which overshadowed news about Anglo- Australian BHP Billiton's $39 billion hostile takeover bid for Canada's Potash Corp. Economic data is light this week. The main focus will be on Tuesday's June retail sales data. A speech by Bank of Canada Deputy
Governor John Murray will be closely eyed for clues on the economic outlook. Recent disappointing North American economic data trimmed bets that the Bank of Canada would raise rates on September 8.

MXN - Mexican peso reversed its gains last week, falling 1.61% against the greenback on risk aversion flows. Peso bonds pushed higher, pressuring yields to fall to a record low as the central bank held its
benchmark overnight lending rate unchanged at 4.5%. Despite the rapid economic expansion in the second quarter, policy makers believe inflation will remain within the central bank's forecast signaling that Mexico's interest rates will remain fixed out to Q2 of 2011. Further stressing the peso was today's retail sales release for June at a 1.5% growth vs. the previous 5.0% and 4.3% eyed.

AUD The Australian Federal election, for the first time in 70 years, has failed to deliver a majority government. Currently the Australian Labor Party has 70 seats out of 150 while opposition Leader Abbott's Liberal-National coalition has 72, forcing both Leaders to open negotiations with independent lawmakers to form a minority government. The prospect of a less stable government and the possible drift to less friendly business policies will certainly weigh down investor appetite as the two major
parties undergo talks. Currently, the issues for the currency are the mining tax, fiscal reform, and uncertainty of who will lead Australia.