The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.5610 level and was capped around the $1.5705 level. Technically, today’s intraday low was just above the 50% retracement of the move from $1.5300 to $1.5910. San Francisco Federal Reserve President Yellen reported U.S. monetary policy is “nearing a crossroads” and added “The risks to inflation are likely not symmetric and they have definitely increased. We cannot and will not allow a wage-price spiral to develop.” President Bush verbally intervened on the dollar saying “The U.S. believes in a strong dollar policy and believes that the strength of our economy will be reflected in the dollar.” Federal Reserve Chairman Bernanke speaks tomorrow and Thursday about financial regulation. Data released in the U.S. today saw the Conference Board’s June employment index fall 0.6% to 111.9. In eurozone news, European Central Bank member Juncker said the ECB’s decision on Thursday to lift its main refinancing rate by 25bps to 4.25% “was a message” to wage negotiators. Data released in Germany today saw May industrial output off 2.4% m/m. Euro bids are cited around the $1.5645/ $1.5230 levels.

The yen depreciated appreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥107.75 level and was supported around the ¥106.65 level. Technically, today’s intraday high was right around the 76.4% retracement of the move from ¥108.55 to ¥105.00. Group of Eight policymakers convened in Hokkaido and President Bush verbally intervened to support the U.S. dollar. Bank of Japan Governor Shirakawa reported “Japan's economic growth is slowing, mainly due to the effects of high energy and material prices. Inflationary risks are also intensifying globally. We thus need to watch closely uncertainties about the global economy and international financial markets, as well as the impact of higher energy and material costs.” The central bank released a quarterly survey overnight that reported “According to reports from each of the nine regions in Japan, growth of the economy as a whole continued slowing recently, mainly due to the effects of high energy and material prices, although there were regional differences.” Data released in Japan overnight saw foreign exchange reserves rise to ¥1.00 trillion in June, the first increase in three months. The Nikkei 225 stock index gained 0.92% to close at ¥13,360.04. Dollar bids are cited around the ¥103.00/ 101.35 levels. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥168.50 level and was supported around the ¥167.10 level. The British pound and Swiss franc came off vis-à-vis the yen as the crosses tested bids around the ¥211.30 and ¥103.90 levels, respectively. The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8690 in the over-the-counter market, up from CNY 6.8589.

The British pound weakened vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.9645 level and was capped around the $1.9825 level. Technically, today’s intraday low was right around the 50% retracement of the move from $1.9405 to $2.0005. NIESR reported U.K. economic growth is likely to be around 0.2% in the three months to June. Sterling fell sharply after the release of economic data that suggests the U.K.’s industrial sector is set to slip into a recession. May manufacturing output fell 0.5% m/m and 0.8% y/y, the largest decline since February 2006. Also, April industrial production fell 0.8% m/m and 1.6% y/y. Cable bids are cited around the US$ 1.9360/ 1.9100 levels. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.7965 level and was supported around the ₤0.7900 figure.

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0230 level and was capped around the CHF 1.0340 level. Data released in Switzerland overnight saw June unemployment fall to 2.3% from 2.4% in May. U.S. dollar bids are cited around the CHF 1.0020 level. The euro moved higher vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.6165 level while the British pound moved lower vis-à-vis the Swiss franc and tested bids around the CHF 2.0220 level.