The Greenback roared back last week on renewed risk aversion in the currency markets along with the FOMC's surprise plans for the Fed to reinvest agency loan repayments it was receiving into long term Treasuries. The Fed's new modified version of quantitative easing which was announced on Tuesday also hit the stock market, causing the DJIA to lose over 3% last week. In addition, the Fed made good on their "extended period" to hold down rates, leaving the benchmark Fed Funds rate at 0.25%, as was widely anticipated.

The U.S. Dollar gained across the board, with the Euro losing 4.2%, Sterling shedding 2.4% and the Yen down 1.0% on the week. The commodity dollars also lost considerably against the Greenback, with the Aussie losing 2.9% and the Kiwi down a whopping 3.9% on the week.

As mentioned above, the U.S. stock market lost over 3% while the commodity market was soft as well, with the energy sector off 6% last week. Nevertheless, the metals market was firm, with gold closing at $1,214.72 per ounce and silver at $18.30 per ounce.

The FOMC statement out on Tuesday was by far the highlight of the week, and while it generally reflected increased economic weakness in the United States, the proposed FOMC measures buoyed the Dollar considerably.

In other news affecting the U.S. Dollar, the U.S. Trade Deficit widened in July as exports fell 1.3% and imports jumped by 3.0%. CPI beat expectations gaining 0.3% month to month, while Core Consumer Prices rose by 0.1% which left the Core Inflation rate unchanged at 0.9%. Retail Sales also rose by 0.4% on stronger gasoline and automobile sales with the Core Retail Sales number dropping slightly by 0.1%.

While the Greenback gained considerably last week against all the majors, the fundamental picture in the United States was little changed despite a few positive seasonal economic numbers.

Last Week's U.S. Data Review

U.S. economic releases began on Tuesday in the absence of economic releases on Monday, with the above mentioned FOMC statement and Fed Funds rate, which was left at 0.25%. Tuesday's releases also included Preliminary Nonfarm Productivity, which declined by -0.9% quarter on quarter - considerably worse than the increase of 0.3% expected, and Preliminary Unit Labor Costs which gained only 0.2% quarter on quarter, versus a consensus of a 1.5%. Also out on Tuesday were the IBD/TIPP
Economic Optimism survey that printed at 43.6, versus the 45.6 expected, and Wholesale Inventories which rose just 0.1% month on month versus 0.5% expected.

On Wednesday, the U.S. Trade Deficit came out at -49.9B - considerably higher than the expected -42.0B expected, while the U.S. Federal Budget Deficit came out with a -165.0B shortfall versus -168.2B expected. Thursday saw Initial Jobless Claims increase to 484K versus an expected 465K while Import Prices gained 0.2% versus a consensus of a 0.4% increase.

On Friday, Core CPI was out at 0.1% month on month - in line with expectations -while CPI increased by 0.3%, edging the 0.2% consensus. In addition, Retail Sales increased by 0.4% month on month, versus a consensus of 0.5%, while Core Retail Sales came out at 0.2% versus a consensus of 0.3%. Wrapping up last week's economic releases were the University of Michigan's Preliminary Consumer Sentiment which came out at 69.6, edging the consensus of 69.4, while the previous number was revised upward from 66.5 to 67.8. Also, Business Inventories came out at 0.3% in line with expectations.

Fundamental Data Outlook for the United States

The coming week of economic data releases for the United States is again quite active, and offers some interesting data for forex traders on the U.S. economy. The U.S. economic calendar features important housing market releases such as Building Permits due out on Tuesday.

Monday begins the busy week with the Empire State Manufacturing Index (8.1), TIC Long-Term Purchases (36.3B), and the NAHB Housing Market Index (15). Mortgage Delinquencies (last 10.06%) is also tentatively scheduled from August 16th to the 27th.

On Tuesday, the highlighted Building Permits (0.58M) data is due out, as well as the important PPI (0.2%m/m) and Core PPI (0.2% m/m) numbers. Also scheduled for Tuesday are Housing Starts (0.57M), the Capacity Utilization Rate (74.6%), Industrial Production (0.5% m/m) and a speech by U.S. Treasury Secretary Geithner in Washington, D.C.

Wednesday offers just Crude Oil Inventories (last -3.0M), as well as the tentatively scheduled Loan Officer Survey.

Thursday then ends the week with Initial Jobless Claims (479K), the Philly Fed Manufacturing Index (7.2), the CB Leading Index (0.2% m/m), Natural Gas Storage (last 37B) and a speech by FOMC Member Bullard in Arkansas.