Market Update 29 July 2008

The markets seemed calm this session after US equities basically had a meltdown due to the continued decline of financials. With more write-downs and a few major US banks looking fragile, the Dollar was sold aggressively in the NY session, however, at least against the Euro, the Buck held its ground in Asia. The tug of war with unstable US financials on one side and lower oil and weak data in Europe on the other has seemed to have been called a draw, at least for now. EUR/USD failed to move in any profound direction, instead staying in a choppy range between 1.5752 and 1.5736 all session. With spotty data, a stalling economy and many traders on holiday don't expect any record highs in the pair barring a major event. Later in London German CPI will be the data that may be the proverbial spark in the powder keg to bust EUR/USD out of the tight range.

In the far East, the Yen didn't do much on the back of a bunch of data releases, some good, some not so good...With the jobless rate rising to a two year high, retail sales higher and household spending falling short, the USD/JPY pair was confused at best. The pair started the session near the 107.50 level and ended up near 107.40 by London's open, with not much action in between. Many traders are looking ahead to the US NFP on Friday as a guide to the Dollars direction.

Despite increased losses from several native banks, the AUD/USD was higher albeit only slightly. The word is that local exporters were pushing the market higher from the 0.9570 open until 0.9580 as of this writing. AUD/NZD headed higher as well, touching over 1.2865 for a session high.

GBP/USD was tame all day, and the less than 20 pip range mirrored the tone of the FX markets overall. The pair has fallen from its NY highs of 1.9964 to 1.9940 as of this writing. The UK will have Money Supply and Mortgage approval data later in London.

Expect this type of range-bound trading ahead of some major US numbers in the USA, NFP on Friday, and GDP on Thursday.

Upcoming Economic Data Releases (London Session):

7/29	6:40	FR	Consumer Confidence Indicator	JUL	-46	-47
7/29	6:45	FR	Producer Prices (MoM)	JUN	1.30%	0.80%
7/29	6:45	FR	Producer Prices (YoY)	JUN	6.70%	7.30%
7/29	6:45	FR	Housing Starts 3M YOY% Change	JUN	-21.60%	- -
7/29	6:45	FR	Housing Permits 3M YoY% Change	JUN	-19.90%	- -
7/29	8:00	SZ	UBS Consumption Indicator	JUN	1.91	- -
7/29	8:30	UK	M4 Money Supply (YoY)	JUN F	11.50%	- -
7/29	8:30	UK	M4 Sterling Lending (BP)	JUN F	45.9B	- -
7/29	8:30	UK	Net Consumer Credit	JUN	1.4B	1.0B
7/29	8:30	UK	Net Lending Sec. on Dwellings	JUN	4.1B	3.7B
7/29	8:30	UK	Mortgage Approvals	JUN	42K	37K