The U.S. Dollar corrected weeks of gains against most global currencies, falling against the Euro and down especially against the commodities dollars of Australian, New Zealand and Canada. The Greenback also remained more or less unchanged versus the Japanese Yen and the Pound Sterling.

The pause in the U.S. Dollar's recent rise last week was widely attributed to the return of some risk appetite to the currency markets. Also, the European debt crisis took something of a breather after Germany's Constitutional Court voted to allow Germany to contribute to the $1 trillion European rescue package.

Furthermore, U.S. stocks rebounded last week, with the Dow Jones Industrial Average adding 279 points over the week, or 2.8%, representing the first weekly gain for the index in over a month. The index settled at 10,211 on Friday after adding 40 points on the day.

Other U.S. stock indexes saw similar gains, with the S&P 500 index closing the week just under the psychological 1,100 level at 1,091. The index gained 27 points last week or 2.5%. Interestingly, the Nasdaq proved the biggest stock index winner last week by adding 85 points or 3.9% to close at 2,243.

While gains in the U.S. stock markets seemed impressive last week, many traders consider the rally a short-covering correction due to weak underlying technical factors such as trading volume and market breadth.

Also, commodities prices were higher last week, with gold making yet another new all time high of 1251.84 on Tuesday. While crude oil was relatively stable, it also closed higher at $76.30 a barrel, leaving both key commodities just under important technical resistance levels.

U.S. markets will be waiting to see how European financial markets, growing tension in the Middle East, and the ongoing BP oil spill disaster in the Gulf of Mexico will affect order flows in the coming week.

Last Week's U.S. Data Review

The U.S. economic numbers seen last week continue pointing to a weaker overall picture of the economy as data increasingly indicates a double-dip recession is possible or even likely in the coming months as the effects of stimulus measures wear off.

Last week's U.S. economic data started with Consumer Credit on Monday, which expanded by 1.0B month on month, slightly lower than the 1.1B consensus. Nevertheless, the previous number was revised downward sharply from a +2.0B increase to a -5.4B decrease.

Also on Monday, Federal Reserve Chairman Ben Bernanke made comments about the European debt crisis stating that, "European leadership is strongly committed to doing whatever is necessary to preserve the Euro, preserve the Eurozone, preserve the European project, and avoid financial problems that would certainly arise."

Referring to the trillion dollar European bailout package in support of the Euro, Bernanke noted that it was "a lot of money", but he also stated that the package would protect Spain, Greece and Portugal for many years.

On Wednesday, Mr. Bernanke continued testifying before the U.S. Congress. In his statement, he reassured Congress about the U.S. economy by noting that, "Moreover, the economy -supported by stimulative monetary policy and the concerted efforts of policymakers to stabilize the financial system - appears to be on track".

Also on Wednesday, U.S. Crude Oil Inventories dropped by -1.8M, while the consensus was for a decline of -1.1M. In addition, the Fed's Beige Book was released.

On Thursday, the U.S. Trade Balance came out showing a deficit of -40.3B, slightly better than the -40.8B expected. Also, Initial Jobless Claims rose to 457K against the market consensus of 447K and the previously released number was revised downward from -453K to -459K, showing the effects of government Census working hiring. Also out on Thursday, the Federal Budget Balance showed a deficit of -135.9B versus an expected -138.6B.

Friday's U.S. Retail Sales numbers showed a disappointing decline of -1.2% month on month, considerably worse than the 0.2% increase expected. Also, Core Retail Sales came out showing a -1.1% decline versus a consensus of a rise of 0.1%. Nevertheless both previous numbers were revised upwards from 0.4% to 0.6% which eased the market impact somewhat.

Also out on Friday was the University of Michigan Preliminary Consumer Sentiment index, which came out at 75.5 versus a 74.7 consensus. In addition, Business Inventories showed a 0.4% increase month on month versus a consensus of 0.6% and the previous number was revised upwards from 0.4% to 0.7%.

Fundamental Data Outlook for the United States

The coming week's economic release calendar for the United States offers some important data, featuring some key inflation data that includes Wednesday's PPI data and Thursday's CPI numbers.

Monday begins the week with a speech by FOMC Member Bullard in Tokyo, who will also be speaking in Hong Kong on Tuesday.

Tuesday also offers Import Prices (-1.1% M/M), the Empire State Manufacturing Index (20.1) and TIC Long-Term Purchases (77.3B). The NAHB Housing Market Index (22) is also scheduled tentatively for Tuesday.

These numbers will be followed on Wednesday by the featured release of the Producer Price Index or PPI (-0.5% and 0.1% Core M/M), as well as Building Permits (0.63M), Housing Starts (0.65M), Industrial Production (0.9%M/M) and the Capacity Utilization Rate (74.6%). In addition, Fed Chairman Bernanke is scheduled to make a speech in New York.

Thursday is also a weekly highlight, featuring the important Consumer Price Index or CPI data (-0.2% and 0.1% Core M/M), as well as the Current Account (-120B), Initial Jobless Claims (454K), the Philly Fed Manufacturing Index (21.3) and the CB's Leading Index (0.4% M/M).

That ends the week since Friday has nothing of importance due out.