The euro depreciated vis-à-vis the U.S. dollar last week as the single currency tested bids around the $1.5005 level and was capped around the $1.5630 level. The pair lost about 530 pips last week. The FOMC kept rates unchanged with Dallas Fed’s Fisher dissenting in favour of higher rates. Most traders viewed the Fed’s statement as dovish.

Traders were disappointed with Trichet’s hawkishness following the ECB’s decision to keep rates steady. ECB’s Wellink sees monetary policy useless if inflation is above 5%. The ECB’s bank lending survey evidenced tighter lending standards.

Data released in the U.S. last week saw June core PCE up 0.3% m/m and 2.3% y/y; June factory orders were up 1.7% with ex-transportation up 2.3%; June personal spending was up 0.6%; June personal income was up 0.1%; weekly initial jobless claims rose 7,000 to 455,000 with continuing claims up 31,000 to 3.311 million; U.S. pending home sales rose 5.3% in June; the July non-manufacturing ISM index climbed to 49.5; Q2 non-farm productivity grew an annualized 2.2% in Q2 with unit labour costs up 1.3%; and June wholesale inventories were up 1.1% with wholesale sales up 2.8%.

Data released in the eurozone last week saw June retail sales off 0.6% m/m and 3.1% y/y; EMU-15 services PMI fell to 48.3; German GDP fell 1% in Q2; EMU-15 PPI was up 0.9% m/m and 8.0% y/y; German industrial production rose 0.2% m/m; and German June manufacturing orders were off 2.9% m/m and 6.1% y/y.