The Canadian currency, which had been losing versus its U.S. counterpart, climbed the most in more than a week today, as a U.S. retail sales report brought optimism and consequently risk appetite among traders, favoring the loonie in foreign-exchange markets.

Another day of optimism brought the Canadian currency up today, as retail sales surged in the United States, indicating that economic conditions in North America are improving steadily, making the loonie to benefit from such scenario, since the U.S. is by far the main destination of Canadian products.

USD/CAD traded at 1.0722 as of 21:19 GMT from a previous rate of 1.0852 yesterday.

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After a surprisingly negative statement made today by the Bank of England, the United Kingdom witnessed a sharp decline for the pound versus most of the 6 major traded currencies globally, as it indicates that the British Isles remain struggling to revive their economy.

The pound declined versus the greenback today and reached the lowest rate in 3 months versus the euro after Bank of England Governor Mervyn King affirmed that rates to hold reserves in the central bank may be lowered, affecting drastically the pound’s outlook as its attractiveness declined instantly, since investors choose their asset positions based on yield in most of the cases. The pound was rallying earlier as the real estate market showed signs of stabilization through a report that indicated a rise in house prices in U.K., but after BOE declarations, earlier gains were pared and the British currency declined immediately.

After positive news coming from the Bank of England last week affirming that the asset-purchasing program would not be extended, improving confidence for traders to bet on the pound, a negative sentiment reappeared once again, as a cut in rates for holding reserves affect severely a currency’s outlook. Analysts forecast a rather nebulous short-term for the British currency, and other options regionally, like the euro, are to be considered for the moment.

GBP/USD fell to 1.6485 as of 11:00 GMT after being traded at 1.6619 hours earlier, before Bank of England’s statement. EUR/GBP climbed to 0.8861 from 0.8786.

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The U.S. currency lost towards the end of the past week as several factors improved investors’ confidence worldwide, attracting investors to emergent-market currencies, as commodities and stocks surged fueled by positive reports in Europe and Asia, shunning investors from greenback priced assets.

Last week’s end was predominantly optimistic in markets around the world, mainly with Germany and France posting signs of economic growth as PMI increased in both countries and as Federal Reserve Chairman Ben Bernanke stated that the recession is easing adding to the already risk driven attitude among traders globally. The greenback suffered significant losses due to this new wave of risk appetite, since the global slump easing is reflecting in higher-yielding assets appreciation, which declines attractiveness for the relative safety of the greenback.

The forecast for this week regarding the U.S. dollar will rely mainly on reports to be released in Wednesday, when new home sales and durable good orders will be published, and mainly on Thursday, when the quarterly gross domestic product performance is due to be released together with unemployment claims, which are likely to reflect positively for the greenback if the data comes beyond expectations, mostly regarding the GDP, which is forecast to indicate a decrease in the U.S. recession figures, but still remain in the negative field.

EUR/USD ended the week traded at 1.4328. GBP/USD closed at 1.6501.

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