The U.S. Dollar weakened across the board against all the major currencies last week in the wake of dovish comments from the Federal Reserve's FOMC made on Tuesday. The Fed opted once more to leave rates unchanged at 0.25 percent, as expected, but it was the accompanying dovish Rate Statement from the FOMC that sparked the sell off in the Greenback.

Basically, the FOMC comments increased the market's expectations for future quantitative easing from the Fed in its attempts to help stimulate the sluggish U.S. economy that are now being nicknamed QE II by the market. In particular, the forex market focused in on the FOMC's comment that the Fed was, "prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate".

Since March of 2009, the Fed has reiterated it would keep rates low for an "extended period" until the United States economy begins showing improvement. This fresh hint at the possibility of further Fed easing put additional upside pressure on the already weak Greenback.

All major currencies rose against the Greenback last week, with the Euro being the stellar performer rising by a whopping 3.4 percent against the U.S. currency, while the Yen rose 1.8 percent, the Pound Sterling, 1.3 percent, the Australian Dollar, 2.4 percent, the New Zealand Dollar, 1.2 percent and the Canadian Dollar only 0.6 percent.

U.S. stocks had solid gains last week with the Dow Jones Industrial Average rising by 252.41 points or 2.38% to 10,860.26, while the S&P 500 gained 37.52 points or 2.23% to 1,1719.08, while the broad based Nasdaq composite gained 65.61 points or 2.83%, to close at 2,381.22 while the Russell 1,000 gained 12.76 or 2.06% to close at 632.92.

Commodities were generally higher with Crude Oil gaining by $1.33 or 1.81% to $74.99 per barrel while gold made a new all time high of 1,299.72 last week gaining $23.00 or 1.81% per ounce to close the week at $1,297.00 per ounce. The grain market also rose last week with soybeans rising by 5.42% to close at $10.885 per bushel while wheat -one of the few commodities to decline last week - declined by 2.07% to close at $6.61 per bushel.

Yields on U.S. Treasuries were down with few exceptions last week. Near term yields as well as yields on Treasuries bonds declined last week from the previous week. The 3 month T-bill yielded 0.15% versus 0.16% the previous week while the 30 year T-bond yield declined to 3.79% versus 3.90% the previous week.

The U.S. Dollar Index declined 2.46% last week to79.40 from 81.40 on generally mixed economic data.

Last Week's U.S. Data Review

U.S. economic numbers have been giving mixed signals on the economy lately, and last week was no exception. Nevertheless, some signs of improvement in the housing sector as well as a favorable Core Durable Goods number released on Friday are giving economists some hope that the economy may be improving.

U.S. economic releases began on Monday with the NAHB Housing Market Index coming out at 13. This was unchanged from the previous number, but slightly worse than the 14 number the market was expecting.

On Tuesday, Building Permits came out at 0.57M, just edging the consensus of 0.56M, while Housing Starts increased to 0.60M, somewhat higher than the 0.55M expected. Also on Tuesday was the release of the Fed Funds Rate which remained at 0.25%, and a notably dovish FOMC Statement wherein the Fed also stated it would consider the purchase of government debt in order to help with the economic recovery.

Wednesday saw the HPI decline by -0.5% month on month, versus an expected decline of -0.1%, while the previous number was revised significantly lower from -0.3% to -1.2%. Also on Wednesday were Crude Oil Inventories, which rose by 1.0M, considerably higher than the decline of -1.5M expected.

On Thursday, Initial Jobless Claims rose from a revised 453K to 465K, considerably higher than the consensus of 451K expected, also, Existing Home Sales increased to 4.13M versus an expected rise of 4.11M, while the CB Leading Index increased by 0.3% month on month, versus an expected increase of only 0.1%.

Friday had the week's highlight with Core Durable Goods Orders increasing by 2.0% month on month, much better than the consensus of a 0.9% rise expected, also the previous number was revised substantially upwards from -3.8% to -2.8%. Nevertheless, Durable Goods Orders declined by -1.3%, versus the -0.9% expected, and with the previous number revised upwards from +0.3% to +0.7%. Also out on Friday were New Home Sales at 288K that just missed the consensus of 292K, although the previous number was revised upward from 276K to 288K.

Fundamental Data Outlook for the United States

The calendar of economic data due for release in the United States warms up considerably for the coming week, and it will offer some important information for the forex market to digest. With respect to significant data, the coming week will feature Tuesday's release of the Consumer Confidence index by the Conference Board.

Monday has nothing due out, so Tuesday will start the busy week out with the release of the highlighted CB Consumer Confidence index (52.5), in addition to the Richmond Manufacturing Index (6) and the S&P/CS Composite-20 HPI (3.1% y/y).

Wednesday just has Crude Oil Inventories (last 1.0M) due out, plus a speech by FOMC Member Rosengren scheduled in New York.

Thursday looks particularly active and features the release of Final GDP (1.6% q/q), Weekly Initial Jobless Claims (457K), the Final GDP Price Index (1.9% q/q) and the Chicago PMI survey (56.0).

Also on Thursday, Federal Reserve Bank Chair Ben Bernanke will be making important testimony about implementing the Dodd-Frank Act before the U.S. Senate's Banking, Housing and Urban Affairs Committee in Washington D.C. Bernanke will also speak at a Washington town hall meeting that same day.

Friday will then conclude the active week with its very busy economic calendar that includes the release of the Core PCE Price Index (0.1% m/m), Personal Income (0.3% m/m), Personal Spending (0.4% m/m), the Revised University of Michigan Consumer Sentiment survey (67.1) and the Revised University of Michigan Inflation Expectations (last 2.2%), ISM Manufacturing Prices (59.3) and the ISM Manufacturing PMI (54.6), Total Vehicle Sales (11.6M), Construction Spending (-0.4% m/m) and a speech in New York to be given by FOMC Member Dudley.