FOREX: Weekly review

Last week concerns about the slowdown in U.S. economy and debt crisis in Europe were the main factors of pressure on the U.S. dollar and other currencies.
Results of FOMC Fed meeting failed to convince investors that global growth will be sustained.
On Wednesday the FOMC redefined "extended period" as "at least through mid-2013" left its rates unchanged (0% -0.25%). Fed expects slower pace ahead than in June.
The markets went up even despite the weak Reuters/Michigan consumer sentiment index. The index fell to 54.9 in August versus expected 63.2 and previous figure of 63.7, lowest level since 1980.
The euro sharply reacted to the fundamentals from the U.S. and Europe, jumping 300 points against the U.S. dollar per day, and declined last week.
The euro rebounded after the European Central Bank started to purchase Italian and Spanish debt in an attempt to curb the nation’s surging borrowing costs and prevent the crisis spreading further. On Friday another support was received from decision by France, Italy, Spain and Belgium to ban naked short-selling for 15 days.
The currency fell sharply amid U.S. credit downgrade by rating agency S&P. Then there was concern that France, the second largest economy in Europe after Germany, may face a rating cut even though the major rating agencies have reiterated France's AAA rating.
Then the 17-nation currency fell as traders bet the European Central Bank may cut its key interest rate as austerity measures crimp growth.
Last week the Egan-Jones ratings agency downgraded France's AAA rating. However, market participants didn’t attach importance to the downgrade.
The Swiss franc declined following its Wednesday fresh historical high against the dollar as investors favored the safest assets amid concern global growth is faltering. Another driver to fall was the comments and acts of the Swiss National Bank, which said it would “significantly increase” the supply of liquidity to the money market and expand banks’ sight deposits to fight the currency’s “massive overvaluation.” The Swiss franc continue falling after Swiss National Bank Deputy President Thomas Jordan said that a temporary tie between the franc and the euro to curb the Swiss currency’s gains would be legal under the central bank’s mandate.
The yen also gained versus the dollar as “save haven” currency from the lows after the nation’s unilateral intervention on The Bank of Japan added 10 trillion yen ($129 billion) of monetary stimulus on Aug. 4. However, the yen retreated each time, touching the life-time low.
The pound significantly slumped versus the greenback last week despite a substantial growth by the end of the week. The pound tumbled amid the worst civil unrest in 30 years spread in the country and weaker-than-expected U.K. manufacturing. At the turn of the month sterling strengthened against the dollar amid weak consumer sentiment index from Reuters/Michigan.
The Australian and New Zealand dollars showed a sharp rise versus the dollar, but ended the week lower due to their drop on Monday. Earlier the Australian currency fell versus US dollar after a report showed the jobless rate unexpectedly rose to 5.1% in July, up from forecast and June figure of 4.9%.
The Canadian dollar shed against the US dollar on concern about faltering economy of U.S., Canada’s biggest trade partner. At the beginning of the week the loonie harshly dropped amid declining crude oil prices, Canada’s biggest export.