The Australian dollar recovered from the two-year low after the Asian stocks advanced, increasing demand for the higher-yielding currencies.

The Great Britain pound gained as Bank of England Governor Mervyn King was hawkish about the inflation, causing the speculation that the Bank may raise the interest rate soon.

Last week was very important for the US dollar because the currency reversed its bearish trend and strengthened versus most of its counterparts. This week can be even more important as it may confirm the trend or break it.

The South Korean won recovered from its earlier losses today as the lower than expected growth of China’s consumer prices reduced probability of further tightening by Chinese government to reduce inflation.

The Japanese yen weakened today as the slower than expected inflation in China and improving economy of Europe decreased demand for safer currencies.

The Canadian dollar weakened against its US counterpart today after crude oil declined, but the speculation that Canada’s central bank will raise the interest rates before the European Central Bank allowed the Canadian currency to erase the losses versus the euro.

Today’s report about the decline of New Zealand retail sales weakened the nation’s currency, but the New Zealand dollar regained its strength later and currently trades almost flat versus the US dollar and the Japanese yen, and even posted gains against the euro.

The euro fell against most of 16 major currencies today as some nations criticized the plans for battling the debt issues, causing concerns that the sovereign-debt problems won’t be resolved soon.

The Polish zloty weakened today as Poland’s current account deficit surged. The currency is expected to depreciate further.

The first half of this week wasn’t very good for the Canadian dollar, but the losses were offset in the second half, when the currency surged upward even though the sentiment was favoring safety.