Crude oil continues to retreat from record highs due to demand destruction in a weakening global economic scenario. Mild U.S. dollar appreciation did not alter established trading ranges, merely the price’s location within them.

Australian 2Q2008 PPI rose by 1.0% q/q, less than expected, lowering the y/y measure to 4.7% from 4.8% previously, another sign the RBA’s interest rate level is appropriate to contain inflation; however, wholesale price pressures continue to feed through to retail with headline CPI up 1.5% q/q and 4.5% y/y. NAB set aside A$830 million to cover further anticipated losses due to the ongoing subprime mortgage crisis and gold fell 3.64% in the week. AUD/USD closed the week at 0.9558, the 61.8 Fibonacci retracement from the 0.9848 high reached 15 July and the 12 June low at 0.9326. AUD/CAD trended sharply down from strong resistance at 0.9837 while AUD/NZD rose to 1.2966, the highest since November 2000.

U.S. data continues to surprise to the upside, with durable goods orders increasing 0.8% in June, much more than market expectations. June new home sales fell −0.6%, less than expected, and sales for the previous two months were revised higher. The housing market correction has not yet found a bottom, however the downward trend is clearly slowing. Real GDP prints Thursday and on Friday unemployment is expected to decline for a seventh straight month.

The ifo index measuring business climate and outlook, both in Germany and the Eurozone as a whole, fell sharply in July, and the possibility now exists of negative German GDP growth in the second quarter. Eurozone consumer confidence prints Wednesday, manufacturing and services PMI on Friday, and both are expected to contract slightly. EUR/USD trended lower within its established range between support at 1.5350 and resistance at 1.6000, closing the week at 1.5698.

U.K. retail sales for June fell −3.9% m/m and GDP expanded by only 0.2% q/q and 2.2% annually. Manufacturing PMI prints Friday, as well as mortgage approvals and housing prices during the week, and all are expected to ease lower. EUR/GBP moved into the lower level of its established trading range between 0.7840 and 0.8030, while GBP/USD also remained rangebound between 1.9350 and 2.0100, closing the week at 1.9902.

Canadian retail sales for May rose 0.4%, less than market expectation. Price declines in crude oil and other commodity exports drove CAD lower against 14 of the 16 most actively traded currencies this past forex trading week, including a 1.4% fall against USD to close at 1.0194.

The RBNZ cut interest rates by 25bps to 8.0%, the first reduction in five years, and the possibility exists for additional cuts throughout the remainder of the year leading to further depreciation of NZD, which lost 8.8% against USD since 14 March, closing the week at 0.7426. This is within a descending price channel, however there is strong support at 0.7375.

Japanese exports fell −1.7% in June, the first contraction since November 2003, led by slowing demand from the U.S. and Europe and below-trend gains from Asia, contributing to concerns of negative growth in 2Q2008 despite the 4.0% y/y pace set in the first quarter. USD/JPY finally closed above its 200-period moving average at 106.93, in the top of its established trading range between 102.50 and 107.75; however, strong resistance remains at 108.35. AUD/JPY decoupled from the carry trade and could not hold gains above 104.00, closing the week at 103.12.