Historic fall in Gold Price

EUR

Last week the euro dropped sharply due to uncertainty in the euro zone economy. The most watched and awaited event of the week was the result of the Italian elections. The result was surprising to say the least and Mario Monti, the markets' favourite, had a dismal result. Indeed, the EUR/USD plunged before official results were released; as soon as rumours that former Premier Silvio Berlusconi had fared much better than expected. The political paralysis added to concerns that continuing with planned austerity measures will be much more difficult. The pair plummeted from 1.3286 to a daily low of 1.3047.

Certainly that was the most watched event for the week concerning the euro zone. However traders did not focus solely on the Italian situation, but looked at the bigger picture as well. Another main focal point was Mario Draghi's speech in Munich on Wednesday evening. His speech did not only provide clarity regarding the economic outlook of the euro zone but was also realistic. Draghi said that Europe was far from its full recovery and the stimulus measures taken weren't sufficient alone but EU states had to play a role as well in this long process.

The last major event that helped traders get a better view on the European economic situation was the release of unemployment figures on Friday morning. With a disappointing and worrying 11.9%, traders had another reason to take a step back from the euro currency.

USD

In the US, the outlook was quite similar to that for the euro except that market euphoria definitely helped sustain the dollar level. In fact, US major equity indexes were sent higher after the pledges from Fed Chairman Ben Bernanke to keep taking steps to inject liquidity into markets.

Major concern regarding the future of the US economy was the Sequester. Ben Bernanke also warned about it saying that it could hurt the slight recovery started since the beginning of the year.

Unfortunately, the Sequester has been adopted by the Senate on Friday. This series of automatic budget cuts should amount for a total of $85 billion by the end of the year. IMF spokesman William Murray said the IMF would likely shave the 2013 US growth forecast by at least 0.5 percentage point if the cuts are fully implemented.

Such news only contributed to add uncertainty around the EUR/USD pair that lost ground the whole week from 1.3195 to 1.3021 signing a weekly low under the 1.30 levels with 1.2966.

GBP

Cable opened with a significant bearish gap last week. Afterwards, along the week, price action failed three times to fill this gap and plunged violently on Friday morning with the release of a series of bad macro data. In one hour, Cable reached 1.4985 and ended the week consolidating slightly above the 1.50 psychological levels.

On Monday, another set of unfavourable data was released for the UK economy. Indeed, a Purchasing Managers' survey from Britain showed construction activity shrank further in February, the lowest print since October 2009. PMI construction fell to 46.8 from 48.7 against consensus for 49.0. GBP/USD fell to 1.5000 following the PMI data.

JPY

Last week, Japanese Prime Minister Shinzo Abe appointed a new Governor for the Bank of Japan. The official news was not surprising for forex traders which largely anticipated the nomination of dovish Haruhiko Kuroda. The USD/JPY spent the week recovering the huge loss that occurred on Monday to end the week at the same level of the previous week's closing around 93.58. 

Haruhiko Kuroda recently said to the press that he will do whatever he can to end 15 years of deflation that Japan has been through.

AUD

The Australian Dollar headed lower last week against the American dollar. The pair went from 1.0293 to 1.0199 at the end of the trading week. The pair was driven lower after an unsupportive speech by Assistant Governor of the Reserve Bank of Australia Guy Debelle who said he refuses to cut interest rates to stimulate the Australian economy.

In addition, earlier this week the AUD/USD was hurt again by bad macro data coming from China. Indeed, China's twin PMI figures released overnight on Friday came worse than expected and sent the AUD/USD did not help to sustain the pair. The Aussie pared some of its recent losses on Tuesday after the RBA held its key benchmark rate at 3%. The RBA didn't however rule out more easing in the near term, as Governor Stevens said "the inflation outlook, as assessed at present, would afford scope to ease further, should that be necessary."

Gold

Volatility on Gold was again really high last week. Many precious metal traders might have been wiped out last week, especially the bullish ones. It seems like investors are not as much interested in Gold as they were.

Gold fell more than 1 percent and ended February with its fifth straight monthly drop, the longest string of monthly declines since 1996. Spot gold fell 1.1 percent to $1,578.86 per ounce.