Dollar Gains vs Euro and Pound, but Consolidation Main Theme of Markets

JPN All Industries Activity Index Decline 0.9%

In Japan the "All Industries Activity Index" was down 0.9% pressured by steep falls in construction, production, and services.

AUS WMI Leading Index Up, but Future Expectations Low

In Australia The WMI leading index for June showed the "coincident index", which measures current conditions, improving 0.1% . Unfortunately the leading index, which predicts condition in 3 to 9 months grew 2% on the year. This is far below its long term average and spells weak growth ahead for the Australian economy.

UK Bank of England Sees Inflation Easing Slightly

The Bank of England minutes showed that 7 members voted for maintaining the bank rate at 5%, 1 voted for a rate hike, and another wanted a rate cut. The minutes showed that policy makers judged that inflation risks "probably eased a little" in the past month, while downside risks to growth materialized.

UK CBI Manufacturing Orders Weak

Also in the UK, the net 13% of manufacturers judged their bookings for total orders to be "below normal" matching April's 18-month low. The number of manufacturers expecting their sales to fall in the coming quarter was 13% higher than those expecting sales to increase.

GBP/USD - BoE Minutes Take Pound Lower

The Pound-Dollar pair hit a high near 1.8690 to start the global session, but fell overnight as the pair is starting to see a consolidation pattern taking shape. Support at 1.8450 held, and the pair is now back within its recent range. From high to low today's move was about 125 pips.

EUR/USD - Euro Pares Yesterday's Gains

The Euro-Dollar pair also gave up its gains from yesterday. Near the global open the pair hit 1.48, but dropped 120 pips from there in overnight and NY trading. It now trades near 1.47, about the same level as yesterday's open. Data on construction in the Euro-zone showed sharp slowdowns in Germany and Spain, pressuring the Euro.

CAN Retail Sales Increase 0.5%

In Canada retail sales were up 0.5% for the month of June, higher than forecasts. Excluding the auto sector, sales registered a 1.4%, increase. Car sales were down, while increased spending on gasoline as a result of soaring prices was a strong contributor to the headline number.

CAN Leading Index Flat

Canada's leading index remained unchanged in July for a second straight month after small gains in April and May.

USD/CAD - Loonie Gets a Boost Following Retail Sales Data

The US Dollar-Canadian Dollar continued to stick within its downward range. Canada's better than expected retail sales gave the Loonie a boost propelling it to the 1.0570 area, but the greenback rebounded. By 2 PM the pair was trading near 1.0620.

USD/JPY - Dollar Rises and Falls with Oil

The US Dollar-Yen pair rose overnight but fell in NY trading as oil price rose. The Dollar got a reprieve around 11 AM, thanks to a dip in oil, but then surrendered those gains quickly as trading progressed. The Dollar has been pressured this week, and has fallen down into a range. US stocks started positive but wobbled into the red in afternoon trading.

Upcoming Releases

Tonight, Australia posts its RBA bulletin and the Bank of Japan posts its monetary policy report. Overnight, Swizterland releases data on trade, producer prices, and business expectations. Germany and the Euro-zone will unveil manufacturing and services PMI.

Continuing overnight, UK release data on retail sales and business investment. Tomorrow, Canada posts its CPI while the US reveals figures on jobless claims, the phily fed index, and its leading indicator.

Capital Market Services, L.L.C.
www.cmsfx.com

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