This forex trading week saw easing commodities prices, particularly crude oil, metals, and foods, and therefore broadly weaker commodities currencies, while risk aversion faded. Most regional economic data confirmed the global slowdown without yet indicating recessionary levels had been reached.

The RBA meets Tuesday 5 August and is widely expected to leave rates on hold at 7.25%. The June trade balance rose significantly to $411mn and both April and May’s readings were revised higher, while June retail sales fell −1.0% m/m and the Australian Industry Group’s manufacturing index slipped to 46.9, its fourth consecutive contraction. This softening fundamental data plus easing commodities prices pushed AUD lower against most major currencies, including a 2.9% loss for the week against USD, which Friday pushed past mid-June’s support at 0.9330 to close at 0.9291. AUD/JPY also fell 2.2%, closing the week at 100.10, and its RSI dipped below the 30 level for the first time since mid-May on four-hour charts.

The FOMC meets Tuesday 5 August and is widely expected to leave rates on hold at 2%. U.S. 2Q2008 real GDP measured 1.9% y/y and readings for the previous two quarters were revised downward, 4Q2007 into the red, while unemployment grew to 5.7% from 5.5% and 51,000 jobs were cut, a lower figure than market expectations. The manufacturing index for July was flat at 50.0, while residential construction in June fell 1.7% and non-residential construction rose 0.4%.

The ECB meets Thursday 7 August and is widely expected to leave rates on hold at 4.25%, caught between inflation at 4.1% and declining retail sales in Germany (2.4%) and Spain (2.3%). There is a rumour currently circulating within the forex trading market that 2Q2008 Eurozone GDP could print red. Data in advance of the ECB decision include manufacturing and services PMIs and retail sales for the Eurozone as a whole. EUR/USD fell 1.0% for a third consecutive weekly decline, moving into the lower half of its established trading range.

The BoE meets Thursday 7 August and is widely expected to leave rates on hold at 5%. U.K. manufacturing PMI for June slipped to 44.3 from 45.9, its third consecutive month below the 50 level and the lowest reading since 1998, and preliminary estimates of 2Q2008 GDP printed at 0.2% q/q. GBP/USD continued the decline begun 15 July, falling 0.9% to 1.9732, while EUR/GBP remained volatile, bouncing repeatedly from strong support around 0.7850 to close the week at 0.7874.

Canadian GDP fell −0.1% in May. the fourth contraction in six months, sending USD/CAD into the upper echelons of its established trading range, +/− three cents of parity. AUD/CAD fell sharply and on Friday punched through then closed beneath the price channel established just prior to the turn of the year, visible on both daily and four-hour charts.

New Zealand dwelling consents fell 20% in June and business confidence declined to −43.2%, while the trade deficit widened to NZ$223mn, less than market expectations. NZD dropped against most major currencies this past forex trading week, and NZD/USD spiked through the bottom of its established price channel late Friday to close the week at 0.7267. AUD/NZD was increasingly volatile on all time-period charts but continued to decline from late July’s high of 1.2966, closing the week at 1.2782 with its RSI falling to 36.55.