The Congress of El Salvador approved, early this Wednesday, the 9th of the law that classifies bitcoin as a legal tender in the country. The decision makes El Salvador is the first country to adopt bitcoin as its official currency.

Salvadoran President Nayib Bukele announced the plan last weekend and is expected to enact the law this Wednesday morning. The idea, according to him, is to increase the dynamism of the economy and make the country more attractive to investors.

“The ‘Bitcoin Law’ was recently passed by the Legislative Assembly with a qualified majority. 62 out of 84 people voted! It’s all in the past! “, the president exulted. “This is a legislation that will place El Salvador on the map, and we’ll be more appealing to global business,” said Congressman Romeo Auerbach, a Bukele supporter.

Anabel Belloso, from the opposition, who voted against the project, lamented that the law “has not been discussed with specialists, nor with patience”: “The law has many implications in the economic sphere and not everyone knows how this will work, leading to considering that cryptocurrencies are volatile in the market, they are unstable,” he said.

With the new law, bitcoin must be accepted as a form of payment by “any economic agent” in the country, excluding those who “It is a well-known truth that they do not have access to the tools that allow them to conduct bitcoin transactions.” Part of country’s population is excited for El Salvador is the first country to adopt bitcoin as its official currency .

For accounting purposes, the US dollar, the official currency of El Salvador, will be used as a reference, but the text states that the bitcoin exchange rate “will be freely established by the market” and that the State will provide alternatives for “automatic and instantaneous conversion between the bitcoin and the dollar” for those who prefer it that way.

According to Bukele, giving bitcoin the status of legal tender in the country aims to generate jobs and increase “financial inclusion for thousands of people outside the formal economy” – according to the president, 70% of the population of El Salvador is currently unbanked.

In addition, the Salvadoran president also said that bitcoin could make it easier for Salvadorans living abroad to send money to friends and family in the country.

Currently, El Salvador’s economy is heavily dependent on remittances sent from other parts of the world, which represent more than 20% of GDP. Data show that more than two million Salvadorans living abroad send around 5 billion dollars  each year to their home country, that is the first country to adopt bitcoin as its official currency.

Providers of this type of service charge high fees and operations take days to be carried out. With bitcoin, the cost and timeframe for these transactions would be reduced considerably: “This will improve the lives and futures of millions,” predicts Bukele.

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The EUR/USD stabilizes to an intraday high of 1.1249 before falling sharply back toward the 1.12 handle. The pair was stabilized around 1.1208, advancing 0.1 percent. The EUR/USD faces initial support at 1.1127. A break below that level would lead to 1.1057. On the upside, resistance is ascending from 1.1324.

In economic data, German inflation showed signs of recovery in February after prices fell for the first time since 2009, a sign Europe’s largest economy was gradually regaining its footing amid rebounding oil prices.

Germany’s consumer price index rose at an annualized rate of 0.1 percent in February after plunging 0.4 percent at the start of the year, preliminary estimates revealed on Friday. However, the country’s harmonized index of consumer spending – the gauge used by the European Central Bank – remained in negative territory, declining 0.1 percent annually. The harmonized index had fallen at an annual rate of 0.5 percent in January.

Friday’s figures offer little hope that the broader euro area, comprising of 19 states including Germany, could avoid falling into a vicious cycle of deflation. Eurozone consumer prices fell 0.6 percent annually in January, the European Commission confirmed earlier this week, edging further away from the ECB’s target of just below 2 percent.

Plunging oil prices have squashed inflationary pressures throughout the advanced industrialized world, including the United States, which posted an annual inflation rate of -0.1 percent in January. That was the first time since October 2009 inflation had declined.

On Friday the Commerce Department said the US economy slowed more than initially estimated in the fourth quarter, stemming from a wider trade deficit and smaller inventory buildup. Gross domestic product expanded 2.2 percent annually in the fourth quarter, down from the “advance” estimate of 2.6 percent. However, the data set pointed to sustained growth in consumer spending, offering hope that the fourth quarter slowdown was only temporary.

Separately, US consumer confidence slipped in February, but remained close to January’s 11-year high. The Thomson Reuters/University of Michigan consumer sentiment index eased to 95.4 in February from 98.1 the previous month.

Rounding out Friday’s data releases was a housing report from the National Association of Realtors. Pending home sales, a forward looking indicator of US home sales, increased 1.7 percent in January to the highest level since August 2013, then EUR/USD stabilizes. The NAR expects existing home sales to reach a total of 5.26 million this year, up 6.4 percent from 2014.

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The euro posted modest gains against the US dollar on Wednesday, although upside was limited after international investment bank Goldman Sachs lowered the common currency’s near-term forecast.

The EUR/USD advanced 0.15 percent to 1.1360, stopping well short of the 1.14 level. The pair faces near-term support at 1.1301 and resistance at 1.1372. The EUR/USD has plunged more than 17 percent year-on-year. The pair was trading closer to 1.40 last spring.

The euro was also trading near seven-year lows against the British pound. The EUR/GBP fell 0.11 percent to 0.7331, rebounding from an intraday low to 0.7314.

The common currency has been mired in economic and political turmoil stemming from plunging inflation, violence in Ukraine and a deepening Greek crisis.

As Athens struggles to make whole on its campaign promise that Greeks could have the euro without the “cruel” austerity tied to bailout reforms, the newly elected Syriza party could face a political backlash. While the European Commission accepted the validity of Greece’s recently proposed reforms, the European Central Bank and International Monetary Fund publicly disclosed their displeasure with the lack of details in the plans.

“The commitments outlined by the authorities differ from existing program commitments in a number of areas,” ECB President Mario Draghi said in a letter to Eurogroup head Jeroen Dijsselbloem.

Greece slipped back into contraction in the fourth quarter, as the country’s deteriorating climate has added another layer of complication to ongoing bailout talks.

The ongoing Greek bailout crisis likely factored into Goldman Sachs’ latest forecast for the euro. Goldman now sees the common currency at 1.12-1.13 US over the next three months, down from a previous forecast of 1.14. The euro is expected to fall to 1.10 in the next six months, down from a previous forecast of 1.11. The euro will then plunge to 1.08 in a year’s time.

A plunging euro boosted Germany in the fourth quarter, as the bedrock of the Eurozone economy expanded more than twice the rate of forecast. Germany’s GDP expanded 0.7 percent in the final three months of 2014, up from 0.1 percent the previous month. Year-on-year, this translated into an annualized gain of 1.6 percent. Euro area growth averaged 0.3 percent in the fourth quarter, official data revealed earlier this month.

Eurozone consumer prices declined at an annual rate of 0.6 percent in January. Deflation was steepest in Greece, while almost all Eurozone countries experienced negative rates. The European Commission next week is expected to report an even steeper fall for February.

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The EUR/GBP sunk to fresh seven-year lows on Tuesday, as the beleaguered euro continued to struggle amid ongoing talks between Greece and its EU paymasters about Athens’ proposed four-month loan extension.

The EUR/GBP hit 0.7316 in Tuesday’s European session, a new seven-year low. The pair rebounded slightly in Wednesday’s Asian session and was trading at 0.7333. The pair’s next lifeline is at 0.7319. A break below that level would expose the 0.7300 handle. On the upside, initial resistance is likely found at 0.7354.

On Wednesday Bank of England Governor Mark Carney will testify before parliament’s Treasury Committee. Britain’s top central banker is expected to highlight the country’s steady economic growth over the past year, despite plunging inflation. Carney has stated before that inflation could fall below zero by the spring and that the BOE could cut interest rates further to prevent long-term deflation. According to the Bank’s latest inflation report, the consumer price index will average around zero in the middle of the year before rebounding toward the end of 2015.

Last year investors appeared certain that the BOE would be the first major central bank to begin lifting interest rates. Given Britain’s currency macroeconomic realities, analysts expect the BOE to hold off on raising interest rates until at least the beginning of 2016.

Meanwhile, European Central Bank President Mario Draghi will visit the European Parliament in Brussels on Wednesday, where he will participate in a Plenary Debate on the ECB’s 2013 Annual Report.

Eurozone inflation is forecast to fall at a near-record pace in February, stoking concerns about the long-term health of the currency region and whether quantitative easing would be enough to kick start the recovery. While Germany posted stronger than forecast GDP growth in the fourth quarter of last year, the bulk of the gains were attributed to a weakening euro and plunging energy prices.

The European Commission will release preliminary euro area CPI figures next Monday. The ECB’s Governing Council will coalesce next Wednesday and Thursday to discuss monetary policy and unveil new economic projections.

In January the ECB announced it would pump up to €1 trillion into the currency region over the next year-and-a-half to stave off deflation. The €60 trillion-a-month bond buying program was much larger than analysts had expected. The announcement brought the ECB closer into line with Bank of England and United States Federal Reserve, which unleashed their own bond buying programs following the 2008 financial crisis.

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The euro was trading cautiously on Monday, following a week of uncertainty that ended with Greece securing a short-term loan extension in exchange for further oversight from its creditors and other reforms that squashed Athens’ “anti-austerity” pledge. The attention this week shifts back to the economic data, although the threat of an eventual Greek exit from the Eurozone remains in the background.

The EUR/USD was trading at 1.1368 in the early Asian session, down 0.13 percent. The pair faces initial support at 1.1294 and resistance at 1.1445. The euro advanced slightly against its US counterpart last week, but ended on a sour note following the details of the Greek loan extension. The pair briefly fell below 1.13 on Friday before recovering.

Several batches of high profile data are on the docket this week, headlined by Germany. On Monday the IFO Institute will release the business climate index, a closely followed indicator for economic development in Germany. The business climate index is forecast to rise to 107.7 from 106.7, adding further evidence the German economy was regaining momentum following a midyear slump.

On Tuesday the Federal Statistics Office is expected to confirm Germany’s Q4 GDP growth at 0.7 percent, unchanged from the preliminary estimate. Year-on-year, this translates into an annualized gain of 1.6 percent. Fourth quarter growth more than doubled forecast and was a significant improvement over the third quarter’s 0.1 percent uptick.

Separately, Eurostat will post final Eurozone CPI figures for January. Eurozone consumer prices plunged 0.6 percent annually in January, the sharpest decline since July 2009, Eurostat reported last month in a preliminary estimate.

On Thursday Germany will publish official employment figures for February. The number of workers unemployed is forecast to drop by another 10,000 in February. The unemployment rate is forecast to hold at 6.5 percent.

Separately, Eurostat will release several economic indicators on Thursday, including business confidence, industrial confidence and economic sentiment.

Germany and other Eurozone member states will close out the week with preliminary estimates of February CPI. Germany’s harmonized index of consumer prices declined 0.5 percent in January, the first time in more than five years inflation turned negative for Europe’s largest economy.

Eurozone inflation will probably remain negative in the first half of the year before gradually recovering later on, aggravating concerns about the currency bloc’s nascent recovery. Persistently weak inflation also raises concerns about the ECB’s €1 trillion bond buying program, which has designed to shore up consumer prices and promote economic growth.

The ECB will hold its next monetary policy meetings in early March.

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The Canadian dollar declined against its US counterpart on Wednesday, as tumbling energy prices outweighed stronger than forecast growth in Canadian wholesale sales.

The loonie tumbled to 0.8036 US after climbing to a daily high of 0.8089 US on Tuesday. The USDCAD exchange rate advanced 0.6 percent to 1.2445 and is testing initial resistance at 1.2449. On the downside, initial support is likely found at 1.2329.

In economic data, Canadian wholesale trade rebounded sharply in December, led by widespread gains in all sectors. Wholesale sales rose 2.5 percent to $55.4 billion in December, surpassing forecasts calling for a 0.3 percent gain. Wholesale sales had declined 0.3 percent in November.

Six of seven subsectors representing 80 percent of wholesale trade increased in December, led by motor vehicles and parts as well as miscellaneous goods. The motor vehicle industry posted its third consecutive monthly increase, official data showed.

Solid wholesale trade figures weren’t enough to lift the commodity-sensitive loonie after energy prices declined on Wednesday. US crude declined 1.27 percent to $52.85 a barrel. Global benchmark Brent crude dipped 1.55 percent to $61.56 a barrel.

Canada is home to the world’s third-largest known oil reserves and relies heavily on energy exports to fuel its domestic economy. The energy sector accounts for about one-third of Canada’s total export sales. Oil’s seven-month plunge is weighing heavily on the Canadian economy. Alberta, which is home to the country’s oil and gas industry, is expected to sink into a mild recession this year, according to the latest forecast by the Canadian Imperial Bank of Commerce (CIBC).

The US dollar was broadly supported on Wednesday, as investors disregarded weaker than forecast housing and industrial production data following news that Greece officially submitted a loan request to its EU paymasters.

The US dollar index, which measures the dollar’s performance against a basket of six currencies, rose 0.3 percent to 94.33.

US housing starts declined 2 percent in January, but remained above the important one-million mark for the fifth month running. Single-family starts eased off six-and-a-half year highs, slipping 6.7 percent to 678,000.

Building permits, a gauge of residential construction intentions, declined 0.7 percent to a seasonally adjusted annual pace of 1.05 million, official data showed.

Separately, US industrial production rose less than forecast in January, the Board of Governors of the Federal Reserve System confirmed today. Industrial production rose 0.2 percent in January after declining 0.3 percent the month before. The capacity utilization rate, which measures how fully companies are using their resources, declined 0.3 percentage points to 79.4 percent.

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The US dollar was little changed against a basket of currencies on Monday, as American traders paused to observe President’s Day. The greenback could face significant action this week, led by a slew of housing data and the minutes of the January 27-8 FOMC policy meetings.

The US dollar index, a weighted average of the greenback against a basket of six currencies, dipped 0.07 percent to 94.14. The dollar index tumbled sharply last Thursday following disappointing US retail sales.

On the economic calendar, housing data take centre stage this week. On Tuesday the National Association of Home Builders will release the monthly housing market index, a gauge of homebuilder confidence. The housing market index is expected to rise one point to 58 in February, nearing September’s nine-year high of 59. A reading above 50 is a general sign of optimism about housing market conditions, whereas a reading below that level denotes pessimism.

On Wednesday the Department of Commerce will report on housing starts and building permits, key indicators of overall housing activity. Housing starts are forecast to decline 1.7 percent to a seasonally adjusted annual rate of 1.07 million in January. Housing starts had rebounded sharply in December, rounding out the strongest year since 2007. Building permits are forecast to rise 2.7 percent in February, according to a median estimate of economists.

In addition to housing figures, the US government will release industrial production and producer inflation data on Wednesday.

Industrial production is forecast to rebound 0.3 percent in January after slipping 0.1 percent in December. The capacity utilization rate is forecast to rise to 79.9 percent from 79.7 percent.

The producer price index, which gauges inflation in primary markets, is forecast to fall 0.4 percent in January following a 0.3 percent drop the previous month. Excluding food and energy, the PPI is forecast to rise 0.1 percent.

The Federal Reserve on Wednesday will also release the minutes of its January Federal Open Market Committee policy meetings. The Federal Reserve announced last month it would be patient in starting to raise interest rates, a sign policymakers would keep monetary policy highly accommodative for longer than initially expected.

“Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy,” read the central bank’s January 28 statement.

The Fed added, “When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.”

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The EUR/USD advanced for a second consecutive day on Friday as Greece resumed talks with its Troika of creditors, while the US dollar continued to retreat following disappointing retail sales data.

The EUR/USD climbed 0.12 percent to 1.1413, easing off an earlier high of 1.1445. The pair is pacing toward a weekly gain of 0.75 percent. Near-term support is likely found at 1.1325. On the upside, initial resistance is likely found at 1.1461. A break above this level would expose 1.15.

Talks between Greece and its international creditors resumed on Friday in an effort to keep the country financed after February 28, the deadline for the current bailout program. Eurozone finance ministers will hold a second round of talks on Monday. Negotiations broke down earlier this week after Greece and its Eurozone counterparts failed to establish common ground on a new agreement.

Meanwhile, a fresh wave of violence broke out in eastern Ukraine after European leaders agreed to a peace deal in Minsk earlier this week, as rebel forces and Ukrainian troops fought for control over the strategic town of Debaltseve.

Growing instability in Ukraine could dampen near-term support for the euro and other “riskier” assets, as investors opt for the security of safe-haven assets like gold and the Japanese yen.

In economic data, Eurozone GDP rose faster than forecast in the fourth quarter, generating cautious optimism about the region’s nascent recovery. Eurozone GDP rose 0.3 percent quarter-on-quarter and 0.9 percent annually, official data showed. The gains were spearheaded by Germany, which rebounded sharply in the fourth quarter, growing at an annual rate of 1.6 percent.

The struggling Greek economy contracted in the fourth quarter, declining 0.2 percent.

Meanwhile, US data continued to disappoint on Friday, as consumer confidence tumbled from January’s 11-year high. The Thomson Reuters/University of Michigan consumer sentiment index dipped to 93.6 in February from 98.1 in January. A median estimate of economists called for no change.

American consumers are concerned about rising oil prices and were generally less upbeat about the labour market after hearing about layoffs in the oil and gas sector. Consumers’ appraisal of the current situation declined to 103.1 from 109.3, while the barometer of future expectations decreased to 87.5 from 91.

The greenback was generally weaker across the board on Friday. The US dollar index declined further to 94.04, falling 0.05 percent. The index is down 1 point from Wednesday’s high of 95.09.

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The Australian dollar declined against its US counterpart Wednesday despite stronger than forecast consumer confidence and home loans figures, as the markets shifted their attention to Thursday’s employment report.

The Aussie fell back toward 77 cents US on Wednesday after attempting a re-test of the 78-cent level in the overnight session. The AUD/USD consolidated at 0.7705, declining 0.86 percent. The pair faces initial support at 0.7690 and resistance at 0.7826.

In economic data, Australia home loans rose faster than forecast in December, raising concern the country’s housing market was overheating. Home loans increased 2.7 percent in December, following a 0.4 percent drop the previous month, the Australian Bureau of Statistics reported Wednesday.

The value of investor loans rose 6 percent to a record AUD $12.56 billion, well above the average monthly increase of 2.6 percent over the last six months.

On Tuesday Westpac said Australian consumer confidence rose briskly in February, as falling energy prices lifted optimism about family finances and the overall economy. The consumer confidence index rose 8 percent to 100.7, a 13-month high.

The ABS will release January employment data on Thursday. The Australian economy added 37,400 total jobs in December, following a gain of 45,000 in November, rounding out the strongest two-month period of job creation in eight years. Full-time employment soared by 41,600 in December, while the unemployment rate dropped to 6.1 percent from 6.2 percent.

Despite a more robust job market, the Reserve Bank of Australia last week cut interest rates for the first time in 18 months, setting the stage for another rate cut in the next several months. The central bank also lowered its 2015 growth and inflation forecasts and said unemployment will rise, underscoring the need for more accommodative monetary policy.

According to the revised forecast, the Australian economy will expand between 1.75 percent and 2.75 percent this year, down from the previous estimate of between 2 percent and 3 percent. Consumer inflation is forecast to slow to 1.25 percent in the year through June.

The RBA has long held that the Australian dollar is overvalued, giving policymakers plenty of scope to drive down interest rates. The AUD/USD has declined nearly 6 percent since the start of the year and is expected to fall below 75 cents in the short-term. According to BlackRock, the world’s largest asset manager, the Aussie will bottom out below 70 cents US in the first half of 2015.

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The North American currency pair back was on its heels Monday, as rebounding energy prices and better than expected Canadian housing starts supported the Canadian dollar.

The USD/CAD declined more than half a percent to 1.2454. Initial support is likely found at 1.2417 and resistance at 1.2589.

The pair rebounded on Friday after the United States Department of Labor said nonfarm payrolls rose by 257,000 in January, following upwardly revised gains of 429,000 and 329,000 in November and December, respectively. The unemployment rate edged up slightly to 5.7 percent from 5.6 percent as more people entered the workforce, while average earnings rose at the fastest rate in six years.

The stronger than forecast report sent the US dollar surging and supported expectations the Federal Reserve could signal for higher interest rates by midyear. Speculation about a midyear rate hike had cooled in recent months amid sluggish domestic growth and global volatility.

The loonie received a boost on Monday after the Canadian Mortgage and Housing Corporation reported stronger than forecast housing starts in January. Canadian housing starts rose to a seasonally adjusted annual rate of 187,300 in January, up from 177,600 in December and compared with expectations for 177,500.

Rebounding energy prices also helped shore up the Canadian dollar. Crude prices advanced for a third day, as West Texas Intermediate for March delivery rose $1.46 to $53.15 a barrel. Global benchmark Brent crude jumped 43 cents to $58.23 a barrel.

The USD/CAD faces further upside in the short- and medium-terms, as the market continue to price in a much lower Canadian dollar. The loonie’s prospects have been shattered over the last seven months, in part by declining commodity prices but also because of a weaker domestic economy. Canada’s gross domestic product is expected to increase just 1.5 percent in the year through June, according to the Bank of Canada’s said last month. That’s nearly 1 full percentage point below the Bank’s previous forecast.

The BOC joined a growing list of central banks to cut interest rates in January. The Bank reduced its target for the overnight rate by 25 basis points to 0.75 percent. That was the first rate adjustment since September 2010. According to analysts, the BOC could slash interest rates by another 25 basis points by midyear to cope with weak energy prices and deflationary pressures.

Canadian consumer prices declined 0.7 percent in January, as annual inflation slowed to 1.5 percent from 2 percent.

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The euro was little changed against the US dollar on Monday, trading above 1.13 cents US ahead of the European Union meetings in Brussels. The meetings, which will be held on Wednesday, will be attended by newly appointed Greek Prime Minister Alexis Tspiras and German Chancellor Angela Merkel.

The EUR/USD climbed 0.06 percent to 1.1326. The pair is likely supported at 1.1259. Resistance is ascending from 1.1435.

Risk-off trading was the norm on Monday, as investors digested latest comments from the newly appointment Greek Prime Minister, who on Sunday outlined plans to dismantle the Troika’s “cruel” austerity plan. Tspiras said he would not extend Greece’s €240 billion bailout plan set to expire at the end of the month, setting the stage for a political standoff with the country’s European lenders.

European Commission President Jean-Claude Juncker fired back on Monday, telling Greece the supranational institution would not bow to its demands.

“Greece should not assume that the overall mood has so changed that the Eurozone will adopt Tspiras’ government program unconditionally,” Juncker said in Germany on Monday.

Tspiras’ far-left coalition swept to power last month on a platform of “anti-austerity,” promising voters to raise the minimum wage, cut taxes and negotiate a new bailout agreement with international creditors. The Syriza party secured 36 percent of the vote and 149 of 300 parliament seats.

Meanwhile, escalating violence in Ukraine continued to weigh on market sentiment, driving investors to safe haven assets like the Japanese yen and gold. At least 45 Ukrainian soldiers and 11 pro-Russia fighters have been killed in renewed violence in the eastern part of the country, prompting the EU to postpone Russia sanctions ahead of the Minsk summit. German Chancellor Angela Merkel arrived at the White House on Monday to meet with US President Barrack Obama around the issue of whether to arm the Ukrainian government against Russian separatists.

In economic data, Germany’s trade surplus widened more than forecast in December, capping off a record year for international trade and signaling that Europe’s largest economy was improving. Germany’s trade surplus reached €217 billion in 2014, shattering the previous record of €195.3 billion. The country posted a surplus of €21.8 billion in December, up from €18.3 billion in November and compared with the consensus forecast of €17.9 billion. Exports rose 3.4 percent, while imports declined 0.8 percent from November, official data showed. Economists forecast exports to rise only 1 percent in December.

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The Canadian dollar advanced on Monday as oil prices continued to rally, while US consumer spending declined at the sharpest rate since 2009 and manufacturing activity softened.

The loonie, as the Canadian dollar is known, rose 0.8 percent to 0.7941 US, erasing Friday’s losses. The USD/CAD exchange rate tumbled more than 100 pips to 1.2590. The pair faces initial support at 1.2510 and resistance at 1.2805.

Canada’s currency has declined for ten consecutive weeks against the US dollar, as plunging oil prices and weak fundamentals have weighed on the commodity-sensitive currency. The loonie faced renewed selling pressure two weeks ago when the Bank of Canada unexpectedly reduced its trend-setting interest rate to 0.75 percent and downgraded its economic outlook.

Rising oil prices helped lift the Canadian dollar on Monday. West Texas Intermediate for March delivery rose 1.6 percent to $49.01 a barrel. Global benchmark Brent crude rose more than 2.3 percent to $54.23 a barrel.

In economic data, Canadian manufacturing softened in January, the Royal Bank of Canada reported today. The RBC manufacturing PMI declined from 54.9 percent to 51 percent in January, as overall business conditions improved at the weakest rate since April 2013.

US manufacturing activity cooled again in January, as new orders continued to moderate, the Institute for Supply Management reported today. ISM’s monthly gauge of US manufacturing declined from 55.5 to 53.5. New export orders declined for the first time in 26 months, as only five manufacturing sub-sectors reported growth.

In a separate report the Department of Commerce said household spending declined at the sharpest rate since September 2009, a sign consumers were pinching their pennies toward the end of the holiday season. US personal spending declined 0.3 percent in December following a 0.5 percent advance the month before. However, personal incomes increased 0.3 percent. Combined with cheaper gas prices, higher incomes translated into a 4.9 percent increase in the saving rate.

Monday’s data deluge wrapped up with construction spending, a key indicator of US housing activity. Construction spending rose 0.4 percent in December, well below estimates calling for 0.7 percent. The November rate was revised up to reflect a 0.2 percent drop instead of the 0.3 percent decline reported last month.

The US government will report on factory orders on Tuesday, followed by services PMI and employment data on Wednesday. The United States and Canada will each report on international trade on Thursday.

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The USD/CAD advanced for a tenth consecutive week last week, climbing to a nearly six-year high of 1.2794. The pair gained more than 9.5 percent in January, as the Canadian dollar continued to struggle with plunging oil prices and a shaky domestic recovery.

The USD/CAD was trading at 1.2700 in Monday’s early Asian session, as investors set their sights on a deluge of economic data from both countries. Below is a breakdown of this week’s major market movers.

Monday

On Monday the United States Department of Commerce will report on personal income and outlays for December. A slight increase in personal income is expected, although consumer spending is forecast to drop 0.2 percent in December following gains of 0.6 percent the prior month.

Separately, the Institute for Supply Management will release its monthly manufacturing PMI. US manufacturing activity is forecast to remain steady in January following a protracted slowdown in the second half of the year.

Tuesday

On Tuesday the US government will report on factory orders, which measure demand for durable and non-durable goods. According to forecasts, factory orders were unchanged in December after falling 0.7 percent the previous month.

Wednesday

ISM will release its monthly non-manufacturing PMI on Wednesday, an important gauge of US service activity. US services PMI is forecast to rise 1 percentage point to 57.2 in January.

Separately, the ADP Institute will release an advance estimate of US private sector employment growth. Last month the ADP said US private payrolls rose by 241,000 in December. Economists expect a January tally of 215,000.

Thursday

The United States and Canada will report on international trade in the latter half of the week. The US trade deficit reached an 11-month low of $39 billion in December, as oil imports fell to their lowest level in two decades. Meanwhile, Canada’s trade deficit widened in December, as oil exports fell to their lowest level since January 2012.

Friday

The most anticipated data releases of the week come Friday when both countries report on employment. According to forecasts, the US economy added 230,000 nonfarm payrolls in January after registering the strongest year of job creation since 1999. If forecasts hold, January would mark the 12^th consecutive month of above-200,000 job gains.

Canadian employment is forecast to rise 5,100 in January after contracting unexpectedly the month before. Statistics Canada last week lowered the number of jobs gained in 2014 from 185,700 to 121,300. The statistics agency also revised the unemployment rate for December from 6.6 percent to 6.7 percent.

Market Place

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The EUR/USD rallied on Thursday, as technical trading sent the pair higher amid mixed economic data from Germany.

The EUR/USD regained 1.13 and climbed to an intraday high of 1.1367. It would later consolidate at 1.1320 in the North American session, advancing 0.4 percent. Initial support is likely found at 1.1253 and resistance at 1.13355. The EUR/USD could sustain a larger rebound above the initial resistance test as the RSI climbs off oversold levels.

Technical trading supported the euro despite plunging German inflation, which highlighted even more so the downside risks facing the Eurozone economy. Germany’s consumer price index of goods and services declined more than forecast in January, plunging 0.3 percent annually.

Germany’s harmonized CPI rate, which calculates inflation using a method consistent throughout the European Union, declined 0.5 percent annually, the biggest drop in more than five years.

The European Central Bank last week joined a growing list of central banks that have eased monetary policy this month to account for deflationary risk. The ECB introduced its long-awaited quantitative easing program last Thursday, announcing it would begin buying government bonds worth €60 billion per month. The QE program, which is expected to last until at least September 2016, could inject up to €1 trillion into the Eurozone economy.

The EUR/USD plummeted to fresh 12-year lows following the news and risks further downside action as the markets brace for weaker inflation figures and diverging central bank policies between the ECB and United States Federal Reserve.

In a separate report today Germany said its unemployment rate fell in January to its lowest level in more than two decades, a sign Europe’s largest economy was gradually improving despite regional imbalances. Germany’s unemployment rate fell to 6.5 percent in January, down from 6.6 percent a month earlier. That was the lowest level since the reunification of East and West Germany in 1990.

An improving labour market and cheaper gas prices are lifting German consumer sentiment, according to GfK. The market research firm’s monthly consumer confidence index reached 9.3 in February, a 13-year high.

“Consumers are expecting the German economy to continue developing positively over the coming months,” GfK reported on Wednesday in a press release.

It added, “Falling energy prices will play a major role in this respect. Low energy prices combined with a considerable depreciation in the euro are acting as an economic stimulus and should boost not only exports, but also companies’ willingness to invest.”

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The US dollar advanced against a basket of currencies Wednesday, as the Federal Reserve conveyed optimism that inflation would gradually reach its target in the medium-term despite pledging to be patient on raising interest rates.

The US dollar index – a weighted average of the greenback’s performance against a basket of six currencies – climbed 0.33 percent to 94.33. The index reached an intraday high of 94.46 in the hours leading up to the Federal Open Market Committee rate statement.

The Federal Reserve made no changes to monetary policy on Wednesday, pledging to remain patient about raising interest rates in the face of below-trend inflation.

“To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate,” the Federal Reserve outlined in its official rate statement.

The statement added, “When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.”

Policymakers are confident that inflation will gradually return to target in the medium-term as the “transitory effects” of lower energy prices and labour market underutilization diminish. Energy prices have plunged nearly 60 percent since the summer, driving down inflationary pressures throughout the advanced industrialized world. This has prompted central banks in Canada, Switzerland and Singapore, among others, to ease monetary policy to stave off deflation and promote economic growth.

The Federal Reserve has maintained rock-bottom interest rates for more than six years, having only in October ended its record bond-buying program. According to experts, the Federal Reserve could begin lifting interest rates in the second half of the year. Analysts had previously forecast a rate hike to materialize by June.

Rate-hike speculation has fueled the US dollar over the past seven months. The US dollar index is trading at 12-year highs, having gained more than 17 percent year-over-year.

The dollar was trading higher against the euro on Wednesday, as the EUR/USD declined 0.67 percent to 1.1307. The pair is likely to face initial support at 1.1277 and resistance at 1.1359.

The greenback rose more than 100 pips against its Canadian counterpart, as the USD/CAD retook the critical 1.25 level. The pair consolidated at 1.2509 in the North American session. Initial support is likely found at 1.2425 and resistance at 1.2555.

The US dollar could receive a boost at the end of the week when the Commerce Department reports on fourth quarter GDP. The US economy is forecast to rise 3.3 percent annually in the fourth quarter, following a 5 percent gain in the July to September period.

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