Expert Analysis of Today's Market

• The dollar was little changed testing important support on Friday. The yen rose against the dollar and euro after Iran asked Japan’s oil refiners to pay for Iranian crude oil in yen instead of dollar. The EUR/USD hit a new record high above $1.38 after an unexpected drop in US June retail sales.


• The GBP/USD rose modestly on Friday as BOE chief economist Charles Bean said the Bank of England must anchor UK inflation expectations. Trading in a steep uptrend, the GBP/USD is overbought at a 26-year high. There are support from the upward sloping bull-channel and strong support at the 2.00-handle. We are selling one unit of the pair.

Financial and Economic News and Comments

US & Canada

• US retail sales in June dropped a larger-than-expected 0.9% m/m and sales excluding autos fell 0.4% m/m, the Commerce Department said. The 0.9% m/m drop in June overall retail sales is not as bad as it looks. Most of the decline was due to auto sales which are volatile from month to month. Retail sales rose 3.8% y/y, 4.2% y/y excluding autos.

• US import prices rose for a fourth-straight month in June, indicating the strong global economy and the weak dollar pose an inflation risk. US import prices rose a stronger-than-expected 1.0% m/m and 2.3% y/y in June after rising 1.1% m/m and 1.4% y/y in May, the Labor Department said.


• US Department of Housing and Urban Development Secretary Alphonso Jackson is in Beijing to persuade the Chinese central bank to buy more mortgage securities from Ginnie Mae, a mortgage association under the Housing Department. Its securities are guaranteed by the US Government National Mortgage Association.


• Confidence among US consumers unexpectedly rose more than expected in July. The Reuters/University of Michigan’s final preliminary index of consumer sentiment rose to 92.4 in July from 85.3 in June. All sub components rose in July.

Europe

• The average price of houses and apartments selling for at least £2.5 million ($5.1 million) rose 3.1% in June after May’s 2.5% increase, a monthly index compiled by London-based Knight Frank showed. Prices advanced almost 35% from June 2006, the biggest annual gain since mid-1979.

Asia-Pacific

• The National Iranian Oil Company (NIOC) asked the refiners to use the yen exchange rate quoted at the Bank of Tokyo Mitsubishi UFJ on the date cargos are loaded, according to the July 10 letter by Ali A. Arshi, general manager for crude oil marketing and exports in Tehran.

FX Strategy Update