The US currency buoyed against a basket of currency gathering support from sliding oil prices, an unexpected rise in US consumer confidence and rallies in the stock markets.

Euro/dollar had been breaking new levels as oil prices fell below $120 a barrel, pressurizing the European common currency. Oil fell more than $ 4 a barrel to below $121 as signs of weaker demand offset a disruption to Nigerian output. Consequently, the dollar index, which measures the dollar?s performance against a basket of six currencies, soared from 73.301 to 73.428, its highest level in a month. Economists? believed that a decline in oil prices would tend to benefit the dollar as it eased some of the growth concerns. In addition, news that the French consumer confidence plunged to a record low for the seventh straight month in July, spooked many investors. According to analysts, the poor eurozone data were evidence that the effects of the US slowdown had spread to other regions. In addition, the ADP Employer Services report showed US private employer?s added 9,000 jobs in July after job losses of 77,000 in June. Economists, on the other hand, had expected a reading of negative 60,000.

However, the dollar rally seemed to be capped by a rebound in crude oil prices. The latter reignited worries that high energy costs could undermine consumer spending and weakened the US economy further. According to currency strategists, rising oil prices would cause stocks to shed some of their gains.

<B> The US dollar traded at MUR 27.39 as compared to MUR 27.23 last week. </B>

Sterling fell across the board after a batch of weak data exacerbated fears about the health of the economy while dovish data emphasizing possible stress on the property market. In addition, the Confederation of British Industry stated that UK?s retail sales contracted by -36 in July as compared to -9 in June, pressuring the pound to a two-week low against the greenback. Furthermore, figures showed UK house prices had their ninth straight monthly fall in June, taking the annual figure to its biggest drop since data series began in 1991. According to economists, the UK?s economy will slow down even more while escalating is seen as holding the Bank of England from cutting interest rates from the 5 percent level.

<B> The Sterling was traded at MUR. 53.65 as compared to MUR 54.49 last week. </B>

The dollar edged down 0.1 percent against the yen to 107.95 yen on selling from Japanese exporters but stayed in sight of a one-month high of 108.30 yen reached last Tuesday. Japanese industrial production fell 2.0 percent in June from a month earlier and below market expectations. Although traders remained muted to the data, expectations were running that Japan might be heading towards a recession.

<B> The Japanese yen was traded at MUR. 25.27 as compared to MUR 25.54 last week. </B>

<B> Major data/events this week: </B>

Wednesday 06 July: US Mortgage index

Thursday 07 July: US Jobless Claims

		GB BoE rate

		EZ BoE rate				

Friday 08 July:

Monday 11 July: GB Trade

Tuesday 12 July: US

<B>Vassan Caleemootoo HSBC Mauritius Treasury and Capital Markets</B>