GBP

Sterling enjoyed a mixed time of it last week as the pound lost almost 0.5 per cent to the dollar in thin holiday trade. It was a different story against the euro, however, as EUR/GBP slid by 1.15 per cent last week.

In the first full trading week of the year, investors have plenty of data to watch for in the days ahead. Monday sees the release of data on the UK’s key service sector, while investors will be closely monitoring Thursday’s interest rate decision from the Bank of England.

USD

The dollar rose strongly last week after outgoing Fed chairman Ben Bernanke said the US economy should continue to improve in 2014, but reiterated that monetary policy will remain “highly accommodative” for as long as needed. “The combination of financial healing, greater balance in the housing market, less fiscal restraint, and, of course, continued monetary policy accommodation bodes well for US economic growth in coming quarters,” he said.

The dollar was up 0.5 per cent against the pound, while the greenback soared by 1.6 per cent against the euro. USD/JPY touched on a fresh five-year high before easing back by the end of the week.

It’s a data heavy week for USD. Among reports coming out of the US are the ISM service sector figures, ADP’s private sector jobs report, the Labor Department’s initial jobless claims and, to round things off on Friday, the key non-farm payroll data and unem ployment rate. Minutes from the last FOMC meeting will also be in focus.

EUR

The euro suffered heavy losses last week, dropping to multi-week lows against some of its major peers as demand for the safe haven dollar hit the single currency even as Spanish unemployment fell by over 107,000 in December. EUR ended the week lower against USD, GBP and JPY.

Looking ahead, key eurozone consumer inflation data on Tuesday will be in focus as policymakers seek to avoid deflationary pressures. The ECB will announce its benchmark interest rate decision two days later, which will be followed by a press conference with president Mario Draghi.

CAD

The Canadian dollar rose along with other commodity currencies last week on bets raw material prices have bottomed out. The loonie strengthened 0.9 per cent last week against nine developed country peers tracked by Bloomberg Correlation-Weighted Currency Indexes. The Australian and New Zealand dollars also rose by over one per cent. CAD lost 6.6 per cent last year, its biggest decline in five years.

Looking ahead, it is a data-heavy week for CAD. Tuesday’s trade balance figures will be followed by building permits data and, rounding things off on Friday, key employment data.

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