USD

As investors took the weekend to contemplate the bad economic data out of the US and Euro Zone last week, the Dollar benefitted most of the session on Monday as a return to safety took over the market.

Data released on Monday out of the US showed that the services sector shrank at a slower rate in June than in May, a positive sign, however that data was not enough to overcome the whopping 470,000 job losses that were reported last week which was 100,000 more than anticipated.  

As the session wound to a close, the Dollar was in retreat giving back much of its gains to the Australian and Canadian Dollars after the rise in oil prices during last week helped the commodity currencies recover.

At 11:35PM GMT, the US Dollar was up .3% to the British Pound to 1.6282, up .03% to the Australian Dollar to .7975, up .1% to the New Zealand dollar to .6366, even with the Canadian dollar to 1.1595, and down .8% to the Australian Dollar to 95.29.

EUR

A report out of the Euro Zone showed an unexpected decline in investor and analyst sentiment on Monday as European Stocks fell hard bringing the Euro down with them.  

Speculation that recovery was beginning in the Euro Zone was dashed last week after a bad jobs report and negative comments about the timeline for recovery were made by Central Bank President Trichet, after the ECB’s policy meeting.  

Trichet set the recovery expectations out to the latter part of 2010 after hinting several months back that it could happen in the second half of 2009.

At 11:45PM GMT, the Euro was up .03% to the US Dollar to 1.3981, down .65% to the Japanese Yen to 133.36, up .3% to the Sterling to .8585, down .1% to the Canadian Dollar to 1.6213, down .01% to the Australian Dollar to 1.7536 and down .1% to the Swiss Franc to 1.5173.

What is going on?

This week sees central bank policy decisions in Australia and the England, while in the United States, the corporate earnings season for the second quarter gets underway.  

But the primary focus of the week is the Group of Eight (G8) summit on July 8-10, with investors watching for the possibility of a debate on an alternative to the Dollar as a world reserve currency.  

Though any move by central bank reserves away from the Dollar would take several years to materialize, Forex investors are nervous about what comments may be made at this week’s G8 meeting, particularly by China.