Gainers

Losers

Data Provided by MSCI Inc.

Editor's Choice Graph	Graph Description
	The returns of the MSCI ACWI, past 5 trading days, priced in USD and local currencies

Macro Notes
The past week was a positive one for U.S. investors, who saw currency movements go in their favor throughout much of the globe. The week was devoid of investment-altering news, so indecisive movements in global markets reigned as confidence in Europe hinged on progress European leaders make to decisively manage the debt crisis there. The euro, although it has declined heavily in the past 12 months, regained some ground this week to pad U.S. investor returns.

All told, the dollar dropped or held steady against many of the world’s currencies, ending the week on a happier note for U.S. investors than we’ve seen recently.

A hefty 2.5 percent drop in the Brazilian real for the week, however, may signal waning confidence in emerging markets and their currencies by foreign investors.

Fear that contagion from Europe could slow the global economy has U.S. investors worried about emerging markets prospects. Many of the currency movements we’ll see in the weeks ahead will likely hinge on news from Europe and how well investors can stomach the potential turbulence in foreign markets.

Gainers

Losers

Data Provided by MSCI Inc.

Editor's Choice Graph	Graph Description
	The Czech Republic ended Thursday looking like one of the few currencies to appreciate over the week before losing 1.7 percent on Friday and falling back into the red.

Macro Notes
Despite returns tapering off toward the end of last week, Europe had one of the best weeks it has had in a long time. Returns soared early in the week on optimism over legislation to increase the size and scope of the eurozone rescue fund. After Austria approved the expansion on Friday, only three of the 17 eurozone countries remain to approve the plan—Slovakia, Malta and the Netherlands.

Despite the good news, things remain bleak in Europe. French banks are still being closely scrutinized, German economic data is less than rosy and Ireland is now discussing borrowing money from the eurozone rescue fund. On Sept. 28, Portugal Prime Minister Pedro Passos Coelho said his country would be in trouble if any eurozone countries defaulted.

Europe isn’t getting any less volatile anytime soon.

Gainers

Losers

Data Provided by MSCI Inc.

Editor's Choice Graph	Graph Description
	More weakness in the rupee undermined a reasonably strong week for the Indian market.

Macro Notes
Investors in Asia are breathing a collective sigh of relief as the vast majority of the region’s markets finished the week in the green. Unfortunately, China and Hong Kong finished the week lower, as investors tried to make sense of contradicting data. The strength of so many regional markets was therefore tempered by the uncertainty surrounding the region’s economic engine, China.

China’s manufacturing slowed for a third consecutive month in September, casting further doubt over the country’s ability to insulate itself from European and U.S. economic weakness.

Chinese policymakers will be under severe pressure this week as the persistence of inflation again reared its head as factory prices rose to a four-month high. All of this comes on the heels of August’s poor export print and a less than impressive 6.6 percent second-quarter growth rate. It seems concerns about China’s ability to experience a soft landing are being reflected in the price of Chinese bank shares, as the MSCI China Financials index sank 24 percent last month to a low not seen since 2004.

Meanwhile, Indonesia’s market registered a strong week in the midst of the country’s own central bank intervention efforts. In the wake of significant weakness in the country’s bonds, the central bank stepped in and bought 395 billion rupiah ($44.6 million) of Indonesian government bonds in the secondary market. The efficacy of such a program remains to be seen, but the week’s gains were a welcome sight to a market that had been taken to the woodshed in recent weeks.

Another market seeing a comeback after a tumultuous week of trading was Korea. The country saw industrial output decline in August, although it was up more than expected on a year-over-year basis.

Policymakers are struggling to forecast the net impact of a concurrent decrease in the value of the won and weakening demand from Europe. Still, the week’s action helped stem the tide of a 5.9 percent monthly decline on the KOSPI index.

Finally, in India, the market shook off concerns over mounting twin deficits to post a positive week of gains after registering the worst month in more than three years. Sustained rupee weakness is putting pressure on central bankers to help shield the country’s citizens from inflation caused by rising import prices. The currency is the region’s weakest, having fallen 11.5 percent from its 2011 high.

Gainers

Losers

Data Provided by MSCI Inc.

Editor's Choice Graph	Graph Description
	The returns of the MSCI Chile Index, past five trading days, priced in USD and CLP

Macro Notes
Last week was a mixed one in Latin America, as Chile and Mexico recovered in local terms, while Brazil, Colombia and Peru continued in the red.

Bloomberg reports that Brazilian President Dilma Rousseff called for the central bank to continue cutting borrowing costs. Of course, after her remarks, yields on interest futures tanked and the Brazilian real finished the week down.

In bleaker news, the Mexican peso capped off what is now its largest quarterly decline since 2008, as concern of a global economic recession lingered. Being one of the most liquid currencies in the region, the peso’s decline is another red flag that emerging market economies will not be sparred if the U.S. economy slows down.

Even last week’s best performer, Chile, reported that the August unemployment rate was 7.4 percent in the past quarter. For now, that’s a figure that’s strong relative to countries like the U.S.—but unemployment is expected to grow in Chile in the coming months.

We’ll see in the coming weeks whether there’s any hope to calm investors fears.

Gainers

Losers

Data Provided by MSCI Inc.

Editor's Choice Graph	Graph Description
	Returns of the MSCI South Africa Index and the South African rand, past three months, priced in USD and ZAR

Macro Notes
The region showed a diverse mix of local and FX returns. Israeli equities delivered positive returns to local investors last week, but a strengthening dollar against the shekel left U.S. investors flat overall. Egyptian equities meanwhile suffered a steep drop locally that was only slightly offset by an uptick in the Egyptian pound.

The South African rand trudged through another turbulent week. The rand rallied midweek, then gave back some gains as investors sold off rand-denominated debt. Local equity results were mixed, but the forex impact dominated.

Despite the net-positive week for the rand, its double-digit depreciation for the quarter was the worst seen in 10 years, clobbering net returns for U.S. investors in the iShares MSCI South Africa Index Fund (NYSEArca: EZA)

Gainers

Losers

Data Provided by MSCI Inc.

Editor's Choice Graph	Graph Description
	The returns of the MSCI United States and MSCI Canada Index, past five trading days, priced in USD

Macro Notes
In local terms, Canadian equities ended the week on a positive note following a reported increase in GDP in July in part on gains from manufacturing.

However, the Canadian dollar’s continued weakening wiped out the local-market gain from equities. The slumping commodity markets continue to be a drag on the Canadian dollar. The recent strength in the dollar is closely tied to the continued recession concerns.

U.S. economic news was a mixed bag of good, bad and unchanged.

Despite unexpected increases in consumer confidence and personal income, the equity market closed in the red for the week. The markets are idling along, grasping at any information that may indicate the likelihood of a recession. The U.S. dollar and Treasurys continue to be the choice safe-haven assets for many investors, which doesn’t bode well for the international currency impact on U.S. investor’s portfolios.