United StatesVolatility in the FX MarketsThe foreign exchange market witnessed an increased volatility last week, with the US Dollar starting on a strong footing before edging down slightly on Friday as risk appetite heightened. The Euro reached a low of 1.3112 following Standard & Poor’s downgrades of Greece, Portugal and Spain’s credit ratings; the Euro subsequently ended the week higher on expectations that Greece will soon receive emergency aid. The Sterling Pound range-traded between a high of 1.5490 and a low of 1.5124. The Japanese Yen weakened last week to reach a low of 94.60 against the US Dollar. Finally, the Swiss Franc traded between a high and low of 1.0924 and 1.0697 respectively.FOMC StatementFederal Reserve officials renewed their intentions to keep the benchmark interest rate near zero for an extended period. The Fed also shifted its language on the labor market from past months’ “stabilizing” to “beginning to improve”, and noted that housing starts have edged higher. US GDP Slows in Q1 The US economy expanded at a 3.2% annual rate in the first quarter as consumers stepped up spending, suggesting the recovery is becoming durable. This figure was lower than last year’s fourth quarter rapid 5.6% pace and slightly weaker than economists’ expectations. Consumer spending, which normally accounts for about 70% of US economic activity, added 2.55% to GDP last quarter, the biggest contribution since the fourth quarter of 2006. Economic DataHome prices in US cities rose less than forecasted in February from a year earlier, signaling that a housing recovery will take time to develop. The S&P Case-Schiller home-price index showed that home prices in 20 US cities increased by 0.6%, the first gain since December 2006. In parallel, consumer confidence rose to 57.9 in April from 53.2 in March reaching its highest level since September 2008, as views about current and future conditions improved in the market. Last, the labor market showed some improvement as the number of people seeking jobless benefits fell last week to 448,000 from 459,000 in the previous week. EuropeDowngrade for Greece, Portugal and SpainEurope’s debt crisis widened last week as Standard & Poor’s downgraded the credit ratings of Greece, Portugal and Spain consecutively. Greece’s credit rating was lowered to junk status, from BBB to BB. In parallel, Portugal and Spain’s credit rating were lowered to A- and AA respectively. All three countries were given a negative outlook, which reflects the possibility of further downgrades if these countries’ fiscal positions deteriorate further.Economic IndicatorsThe unemployment rate across the 16-nation Eurozone was 10% in March, unchanged from February and in line with economists’ forecasts. Separately, the European Union Statistics Agency estimated that the number of unemployed people in the euro zone rose by 101,000 in March to 15.8 million. Last, the consumer price index showed that prices rose by 1.5%, their fastest annual pace since December. United KingdomEconomic IndicatorsHouse prices improved by 1% from March to April, the second consecutive monthly rise; on an annual basis, house prices increased by 10.5%. The Nationwide predicted in the same statement that the past year’s surge in prices would ease later in 2010. In parallel, UK consumer confidence fell to a three-month low of -16 from a previous -15 where markets were expecting confidence higher at -14; households became more pessimistic about the outlook of their finances in the weeks before the general election as fears from a hung parliament rose. JapanManufacturing NumbersJapan’s industrial output rose 0.3% in March, lower than the forecasted 0.8% increase but above the previous fall of 0.6%. Another positive figure was the Manufacturing PMI, rising for the first time this year to 53.5 from 52.4 in March. The industrial output and manufacturing activity indicators were both driven by new export orders due to increased demand from Asia.Deflation Continues While Unemployment StabilizesJapan’s core consumer prices fell 1.2% in March on an annual basis matching market forecasts, falling for the 13th consecutive month as deflation remains a major hurdle for the world’s second largest economy. Separately, the unemployment rate in Japan rose slightly from 4.9% in March to 5.0% in April, the first time in four months, a sign that the job rebound might be moderate.KuwaitDinar at 0.28845The USDKWD opened at 0.28845 on Sunday morning.