FOREX: Weekly review

The euro lost ground last week as concerns over eurozone growth and the region’s fiscal crisis weighed on the currency.
The euro suffered as surveys of manufacturing activity across the region came in weaker than expected, revealing that the slowdown in activity had spread from the periphery of the eurozone to its core, with German manufacturing growing at its slowest pace in nearly two years.
This raised speculation that the European Central Bank might abandon its hawkish stance on interest rates at its policy meeting next week and might even loosen monetary policy and cut rates in a bid to stimulate growth in the months ahead.
Adding pressure on the euro were fresh worries over the eurozone debt crisis.
There was sluggish demand at an auction of Spanish government debt and reports that international debt inspectors from the EU, International Monetary Fund and ECB had paused their review of Greece’s austerity reforms, potentially delaying a second bail-out package.
Over the week, the euro fell 1.9% against the dollar, lost 0.9% against the pound and was 1.7% lower against the yen.
The Swiss franc was the biggest beneficiary as investors sought a haven from renewed concerns over eurozone government debt and growth in the region.
The franc rose as speculation receded that the Swiss National Bank would intervene directly in the market and sell the franc.
Indeed, traders said the SNB, which before last week had been active in the forwards market to drive down interest rates and suppress demand for the franc, had pulled back from the interest rate market, giving investors a green light to buy the currency.
Over the week it rose 5% against the euro and climbed 3.1% against the dollar.
The dollar found haven support even as disappointing US jobs data stoked more concern about the health of the US economy and raised speculation of a further round of quantitative easing.
U.S. payrolls were unchanged last month, the weakest reading since September 2010, after an 85,000 gain in July that was less than initially estimated, Labor Department data showed today. The median forecast called for a rise of 65,000.
Fed Chairman Ben S. Bernanke said last week the central bank still has tools to boost a recovery that has been weaker than forecast, while sticking to his view that growth will pick up. He spoke at a conference in Jackson Hole, Wyoming. At last year’s event, he foreshadowed the Federal Open Market Committee’s second round of quantitative easing, the purchase of $600 billion of Treasuries from November through June.
Minutes of policy makers’ last meeting on Aug. 9 showed some FOMC members favored more aggressive action to stimulate the economy. The minutes were released Aug. 30.
On the week, the dollar rose 0.2% against the yen and was up 1% against the pound.