Rally in EURUSD Becomes Exhausted After Mixed US Data (page 2 of 2)

This contributed to the Swiss franc's slide against both the Euro and US dollar. Consumer price numbers are due for release and if they come out weak, the franc could extend its losses.

British Pound - Unsurprisingly, housing market data printed strongly this morning with net consumer credit and mortgage approvals both rising. In fact, mortgage lending increased by the biggest amount in 3 years, illustrating the resilience of the housing market, which has been the primary driver of the economy.

Money supply remained unchanged, suggesting that for the time being, inflationary pressures are not running away. More housing market data is due for release tomorrow but the market's main focus should be on the Gfk consumer confidence report and the CBI distributive trades survey. Both are predicted to be strong and if that is really the case, it could help the GBP/USD find some sort of support.

Japanese Yen - Stronger Japanese data was reflected in the currency's performance against the Euro, British pound and Canadian dollar, but the rebound in the US dollar was so dominant that it overpowered the gains in the yen. Industrial production increased by 1.6 percent in the month of October, which was quite a surprise considering that the market was expecting the index to fall by 0.4 percent.

Vehicle production also increased by 12 percent, which we believe must be tied to the weakness in the Yen against the Euro. The value of the Yen is making it very inexpensive for Europeans to import Japanese made cars. Meanwhile we also heard some bullish comments from Japanese officials last night. Both the Bank of Japan Governor Fukui and Finance Minister Omi said that the economy is expanding moderately and they are optimistic about its economic outlook.

Commodity Currencies (CAD, AUD, NZD) - The commodity currencies were all weaker against the US dollar despite the rise in oil and gold prices. Australia had a horrid trade balance number reported last night as well as weaker construction work. New Zealand reported disappointing building permits and stronger money supply growth. Canada reported a drop in industrial and raw material prices, which indicates softer inflationary pressures and a rise in the current account balance. Australian retail sales are due for release tonight and the recent trend of data suggests that spending could slow. Canada is set to report GDP, which is predicted to be stronger.