USD - The USD begins the week near the middle of its recent well?worn ranges against most of its major counterparts. While declining stocks, mixed economic data and renewed concerns over global economic growth are providing safe?haven support, the demand is being largely offset by increased speculation that the Fed will pursue further monetary easing. The Q1 GDP report released last Friday showed that the world's largest economy is growing at a slower pace than expected, down to 2.2% versus the 3.0% pace set in Q4 '11. Moreover, the monthly personal spending report released this morning fell short of expectations at +0.3%, and was sharply lower than last month's +0.9%. The recent decline in consumer confidence was also reflected in this morning's reports with the difference between personal income and spending turning to a net savings for the first time since last December. The week ahead is filled with key economic releases with ISM manufacturing on Tuesday and ADP employment and factory orders both on Wednesday. Thursday sees the release of ISM non?manufacturing and weekly jobless claims a day ahead of the all?important nonfarm payrolls and unemployment reports both due Friday. While the recent string of negative economic data and dovish Fed rhetoric may continue to weigh on the dollar, with the FOMC's next meeting not scheduled until June 30th, the USD's downside will likely be limited in the near term.

EUR - The euro is showing resilience despite mounting pressure on signs that Europe is slipping into recession. The single currency held above $1.32 achieved after last week's lower?than?expected US growth figures and despite further signs of weakening in Europe. Spain reported that it sank into recession in the first quarter, contracting ?0.3% following Q4's ? 0.4% dip. The country was also hit with a ratings downgrade last week by ratings agency S&P which sent the country down 2 notches to BBB+ and reduced the credit score on 11 of its banks. Hobbled by austerity measures to reel in its deficit, Spain said that it would not return to growth until late this year or beyond. Despite deteriorating economic conditions, Europe has limited policy options to assist needy economies. With inflation in the region running above target at 2.6% in April, the ECB faces limited ability to cut interest rates as Europe heads into its second recession in 2 years. ECB President Mario Draghi has called for countries to implement policies that focus on growth and not just debt and deficit reduction but the message is a hard sell given strict budget limits imposed by the EU. Given the challenges the region faces, pressure on the euro is expected to continue with a retest of support levels.

GBP - The GBP begins the week near its highest levels against the USD since the end of last summer as the outlook for the British economy begins to improve. The pound got an initial boost after the Swiss National Bank announced that it nearly doubled its holdings of GBP in the first three months of the year. However, it's unlikely that the SNB's increased demand for the sterling will persist, at least with the same momentum, with the GBP now comprising more than 8% of total Swiss foreign currency reserves. Meanwhile, the GBP jumped to a 22? month high against the EUR after British home prices rose 0.4%, marking the best three?month gain in more than three years.

JPY - JPY is unchanged from Friday as trading in Japan is expected to be light given the holidays this week. USDJPY fell considerably over the course of the past three sessions, with a decline exceeding 1.4%. Following last week's BoJ meeting, broader market sentiment has shifted and is driving JPY in the absence of tier one data, the next of which will be Japan's current account figures to be released on May 9th. Commodity Currencies - The CAD is down 0.1% since Friday's close, but is still trading close to its seven?month high. Today, Canadian GDP came in at negative 0.2% m/m, a disappointing number vs. a consensus print of 0.2%. After last week's shift in tone from the BoC, this week's round of fundamental releases will need to come in at or above consensus to keep CAD's new upward trend in place. Following a relatively uneventful start to the day, the Aussie failed to attract bidders for much of the domestic session last Friday, trading 30 basis points either side of the 1.0380 mark against the USD. It topped out at 1.0473 during the US session. The Kiwi moved substantially higher overnight (last Friday) after the US economy expanded less than forecast in Q1 2012.

MXN - The Mexican peso appreciated over 1.3% against the US last week as data suggests inflation slowed and the outlook for economic growth improved. Mexico's central bank kept its benchmark interest rate unchanged at 4.5% for the 26th consecutive meeting. Economic growth accelerated to 6.24% in February, while consumer prices dropped 0.42% in early April. Annual inflation slowed to 3.73% in March from the previous 3.87% and preliminary trade surplus grew to 1.6 billion for March. Despite domestic growth, mixed economic news out of the US may still pressure peso in the medium term.

RMB - With China on holiday today and tomorrow there is no CNY fixing. The CNH (Offshore market in Hong Kong) ranged from 6.3020 ? 6.3035. Look for the RMB to continue to strengthen ahead of meetings scheduled for later this week between China's leaders and U.S. Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner.