USD - With recent US data raising concerns about the strength of economic recovery over the second half of the year, the greenback could be in the spotlight this week following its losses going into the weekend. Last week's data releases did nothing to ease market fears of a significant slowdown later this year. The manufacturing ISM took an unusually large decline of 3.5 points with the new orders indices hit hard. Fundamentals had been pointing to a slowdown in the manufacturing production over H2, but the deterioration in financial markets has likely accelerated that decline.

Consumers are also starting to react to the deterioration and general rise in uncertainty. The conference board's measure of consumer confidence fell back to its March level after two months of strong increases. Furthermore, pending home sales suffered a significant decline of 30% in May which brings the index below the lows in 2008 and 2009. This week should be relatively quiet at least in terms of data and speeches. The ISM non- manufacturing index will be the primary release and a decline to 54.4 is in the cards given the recent weakness in housing and equity markets. The weekly release of jobless claims could also attract attention given the recent increased uncertainty about the state of the US labor market.

EUR - The euro is holding its gains following last week's soft US jobs report. The single currency rose to highs at $1.2643 overnight as market participants have become concerned over signs of a slowdown in the US economy. Euro jumped nearly 3.5 cents last Thursday in anticipation of a weaker job report. As concerns over Greece and other less performing Europe countries have subsided, recent signs of a US slowdown have come back to the forefront. Meanwhile, the Eurozone continues to show signs of expansion albeit at a gradual pace.

The Eurozone Purchasing Manager's Index (PMI) remained above the 50 expansion threshold at 56.0 in June while unemployment fell slightly to 10% in May. Despite the recent gains, the sustainability of the euro remains to be seen as it stems more from concerns over the US recovery than European growth.

GBP - In the UK, focus will be on Thursday's publication of May industrial production numbers and the BoE monetary policy meeting on Thursday. The BoE is expected to keep its benchmark interest rate on hold at a record low - 0.50% - until at least May 2011 as spending cuts weigh on the economic recovery, according to the British Chambers of Commerce. While the June PMI and recent orders data indicate a loss of momentum, the underlying trend remains for higher manufacturing output. The BoE is not expected to bring any changes to the monetary policy setting, despite the recent tight budget, as MPC member Andrew Sentance is expected to remain the sole advocate for a tighter policy.

JPY - Last week, the Japanese yen gained 1.66% against the USD below 87 as investors seek the yen as a safe haven currency on concern the global economic recovery is slowing. However, the yen gave back gains and fell to a one-week low against the USD following a rebound in global stocks today that began in Asia. News that Japan's index of leading indicators fell for the second straight month suggests a slowing in Japan's recovery. This Wednesday, Japanese Machine Orders and Trade Balance data will be released.

CAD - The Canadian dollar fell 2.52% last week against the USD as investor cut bets that the Bank of Canada will raise rates on July 20 on worries the North American recovery is stalling after Friday's sluggish U.S. jobs data. Concerns about China's growth, repayments to the European Central bank, and falling commodity prices have caused investors to become increasingly risk adverse. However, the loonie rebounded for the first time in three days after fears were relieved when the Reserve bank of Australia gave an upbeat assessment of the global economy; crude oil prices rebounded near $73 a barrel, and copper rose to one-week high. This Friday's important employment and housing data will provide further outlook on the economy.

MXN - The Mexican peso slid almost 4.3% against the dollar last week before retracing over 1% today on increasing oil prices. Last week's weaker-than-expected US jobs data spurred worries that the US economic recovery may have come to a stall, leading to the largest weekly drop for the peso since May. On the data front, consumer prices for June is expected to be released on Thursday.

AUD - The Australian dollar gained after the Reserve Bank of Australia left rates unchanged but provided an upbeat assessment of the economy. Aussie rose to over 2 cents overnight to highs at$0.8553 after the central bank highlighted expanding trade and inflation risks at home. Concerns over China's move to rein its housing market had depressed the Aussie recently but was downplayed by the RBA. Markets are forecasting interest rates to remain unchanged at 4.5% for the remainder of the year.