The euro fell sharply vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.5570 level and was capped around the $1.5755 level. Technically, today’s intraday high was right around the 38.2% retracement of the move from $1.5305 to $1.6040. A recovery in U.S. equity prices following yesterday’s meltdown and a decline in NYMEX September crude oil futures for September delivery to the $120 handle saw the common currency yield more ground. Data released in the U.S. saw the S&P/ Case-Shiller May house price index off 15.8% while the July consumer confidence index rose 51.9 from an upwardly revised 51.0 in June. The Bush administration yesterday reduced its GDP growth forecast to 1.2% from its previous 2.7% estimate. In eurozone news, German preliminary July consumer prices were up 0.6% m/m and 3.3% y/y while French Q2 housing starts were off 28.2% y/y. The provisional German CPI data suggest EMU-15 annualized inflation will remain unchanged at 4.0% in July, significantly double the European Central Bank’s 2.0% ceiling target. Other data saw German April wages up 3.5% y/y and French consumer confidence fell to -48.0 in July. Traders await EMU-15 manufacturing PMI surveys tomorrow. Euro bids are cited around the $1.5585/ 1.5230 level.

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥108.30 level and was supported around the ¥107.30 level. The paid reached its highest level since 25 June as traders bought U.S. assets following yesterday’s sizable sell-off. Bank of Japan Deputy Governor Nishimura reported Japan’s economy may be “technically heading into a recession,” another yen-negative factor. Data released in Japan overnight saw the June unemployment rate rise to 4.1%, its highest level in nearly two years as job-openings are at a three-year low. It was also reported that June overall household income fell 2.1% while June household spending was off 1.8% y/y, the fourth consecutive monthly decline. The reduction in final private demand could result in a contraction of real GDP in the April – June quarter. Other data saw June retail sales up 0.3% y/y. The Nikkei 225 stock index lost 1.46% to close at ¥13,159.45. Dollar bids are cited around the ¥106.40 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥168.50 level and was capped around the ¥169.45 level. The British pound and Swiss franc weakened vis-à-vis the yen as the crosses tested bids around the ¥213.90 and ¥103.35 levels, respectively. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8264 in the over-the-counter market, down from CNY 6.8410.

The British pound came off vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.9790 level and was capped around the $1.9970 level. A report commission by the U.K. Treasury concludes the U.K. mortgage market will take a couple of years to normalize. Bank of England today reported that June mortgage approvals were at record lows, declining to 36,000 – the lowest since at least 1999. Also, CBI’s distributive trades survey indicated 61% of respondents noted lower retail sales in the first half of June compared with a year ago for a balance of -36, the lowest reading since July 1983. Additionally a YouGov/ Citigroup repot saw July inflation expectations recede to 4.2% from 4.6% in June and BSA reported June gross lending by U.K. building societies fell to ₤2.985 billion. Cable bids are cited around the $1.9360 level. The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.7865 level and was capped around the ₤0.7910 level.

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0465 level and was supported around the CHF 1.0315 level. Technically, today’s intraday low was right around the 50% retracement of the move from CHF 1.0625 to CHF 1.0010. Data released in Switzerland overnight saw the UBS monthly consumption indicator improve to 2.25 in June, up from 1.91 in May and the largest increase since April 2007. U.S. dollar offers are cited around the CHF 1.0515 level. The euro and British pound moved higher vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6315 and CHF 2.0730 levels, respectively.