The National Bank of Kuwait (NBK) said Sunday the currency market was thrown into turmoil last week after the Group of Seven issued a joint statement stating that domestic economic policy must not be used to target currencies, which must remain to be determined by the market. The NBK pointed to disappointing economic figures from the Eurozone, the UK and Japan prompted large swings in the market. It also noted that the US Dollar Index started the week at the 80.20 level and dropped to a low of 79.84 at mid-week. The greenback gained at the end of the week as cautious investors unwound positions ahead of the G20 meeting. The Index closed the week at 80.48 after reaching a high of 80.62. The NBK report also stated that the Euro opened the week at the 1.3370. The currency edged higher against the greenback to reach 1.3520 following statements from the ECB President, who said that talks about a currency war is way overdone. The currency dropped dramatically amid data that showed that growth in Germany and France contracted. The Euro reached a low of 1.3305 and closed the week at 1.3362. Meanwhile, the Japanese Yen traded in a volatile manner at mid-week as complains from the G7 regarding the currency's movement caused a major market confusion. The currency initially weakened to a week's high of 94.42 after Japanese Finance Minister Taro Aso said a G7 statement recognized that Japan's reflationary policies are not aimed at affecting foreign exchange markets, the report added. However, a G7 official later stated that the statement was meant to signal concerns about excessive moves in the Yen, which prompted a vicious reversal in the currency. Additionally, Japan's gross domestic product unexpectedly shrank in the fourth quarter, reinforcing Prime Minister Shinzo Abe's case for more monetary stimulus to end deflation. The USDJPY drifted lower as investors squared their positions ahead of the G20 meetings combined with speculation that the next Bank of Japan governor may be less inclined to pursue aggressive monetary easing. The pair reached a low of 92.21 and closed the week at 93.48. The NBK went on to say that the Sterling Pound reached a high of 1.5802 at the beginning of the week. The currency weakened dramatically as data showed that inflation, which is stubbornly above the Bank of England's target, is weighing on consumer spending. Data showed that the Pound fell to a 6.5-month low against the greenback as retails sales disappointed the markets. Cable closed the week at 1.5516. The report said that retail sales in the US rose in January for a third consecutive month, showing household spending is holding up despite an increase in the payroll tax that is weighing on wages. Sales climbed 0.1%, matching economists' expectations. The gain was smaller than the 0.5% increases in December and November. Department stores and online merchants were among those showing growing demand as improving job prospects and a strengthening housing market helped companies such as Gap Inc., and Target Corp. The number of Americans filing new claims for unemployment benefits fell more than expected last week, offering hope the sluggish labor market recovery may have picked up a step. Initial claims for state jobless aid dropped 27,000 to a seasonally adjusted 341,000. The prior week's claims were revised to show 2,000 more applications were received than previously reported. It added that last week's drop in claims exceeded economists' expectations for only a 6,000 decline and pushed first-time filings down to the lower end of their range for this year. US consumer sentiment improved in February, lifted by signs of increased hiring, despite heightened worries about a decline in future income. The Thomson Reuters/University of Michigan's preliminary reading on the overall index of consumer sentiment rose to 76.3 from 73.8 in January, topping economists' forecasts of 74.8. The Eurozone slipped deeper than expected into recession in the last three months of 2012 after its largest economies, Germany and France, shrank at the end of the worst year for the region. It marked the bloc's first full year in which no quarter produced growth, extending back to 1995. For the year as a whole, growth fell by 0.5%. Economic output in the 17-nation region fell by 0.6% in the fourth quarter following a 0.1% drop previously. The quarter-on-quarter drop was the steepest since 2009, and worse than the expected 0.4% drop. Germany, the largest economy in the region, contracted by 0.6% quarterly, marking its worst performance since the height of the crisis in 2009 as exports declined significantly more than imports. "Similarly, France declined by 0.3% in the fourth quarter, slightly worse than market expectations. The Eurozone posted an increase in its trade surplus in December, lower than expected, as imports fell steeper than exports. Trade surplus of the 17 countries was 11.7 billion Euro in December," it went on saying. This was higher than 8.0 billion Euros a year earlier, but was below the 13. 1 billion Euros expected in the market. The report indicated that inflation in the UK unexpectedly remained unchanged for the fourth consecutive month in January, holding at its highest level since May. The Office for National Statistics said that annual consumer price inflation held at 2.7%, slightly below the median forecast in a Reuters poll of economists for a slight uptick to 2.8%. This was the first time inflation remained unchanged for four months in a row since records began in 1996. Meanwhile, in the BoE inflation report, Governor Mervyn King stated that the UK's economic recovery will prove slow, high inflation will take longer to fall, and the central bank can do little on its own to improve matters. In particular, worsening inflation indicates a further fall in real wages, which have just hit their lowest since 2003. In the conference, he added, "This hasn't been a normal recession, and it won't be a normal recovery." "There are limits to what can be achieved via general monetary stimulus - in any form - on its own." Finally, he stated that high inflation was due to a weaker currency and government-ordered price hikes, not overly loose monetary policy, and that the central bank should look through the effect of those factors on prices. British retail sales posted a surprise fall in January as unusually snowy weather hurt food stores in particular. Sales including automotive fuel fell 0. 6% on the month and on the year - confounding economists' forecasts for higher sales. Economists state that the main reason behind the falls was bad weather during the month, which led to shutdowns of some smaller grocers and drove the biggest monthly fall in food sales since May 2011. Sales excluding fuel fell 0.5% weaker than expectations of a rise by 0.4% on the month. Besides the temporary hit from poor weather, Britons' spending power has been eroded by sticky inflation in recent years. Japan's economy unexpectedly shrank last quarter as falling exports and a business investment slump outweighed improved consumption, bolstering Prime Minister Shinzo Abe's case for more monetary stimulus to end deflation. Gross domestic product contracted an annualized 0.1%, following a revised 3. 8% fall in the previous quarter. The prolonging of Japan's recession into a third quarter shows that benefits from a weaker Yen and rising stocks have yet to be felt, the report concluded.