Dollar Gains Despite Lower Consumer Confidence (page 2 of 2)

For the month of July, preliminary figures released by the Statistics Office pointed to a faster than expected rise in the money supply. Here, the more money chasing fewer goods is likely to boost the price of the good at the consumer level.

For the month, supply growth remained above 1 percent , rising 1 percent after a preceding climb of 1.5 percent in the prior month. The recent survey purports the continued existence of inflation, bolstering speculation of further rate hikes, even as some considered the Bank of England's rhetoric slightly more dovish than usual.

However, trumping the idea continues to be the notion of rising unemployment and weaker retail consumption. As a result, next week's gross domestic product figure will serve as a key report in confirming continued growth as central bankers focus on justifiable inflation. The report, if positive is likely to keep the pound higher against the US dollar, at least for now.

Japanese Yen

Bolstering the notion of growth in the world's second largest economy, sales in both Nationwide Department and Tokyo Department sales surveys pared back negative figures to rise in the month of July. For the period, the reports jumped to negative 1.5 and 1.6 percent respectively against 2 percent decline in the month of June.

The recent positive bounces in the reports are being coupled with rising consumer spending reports and price increases in supporting another rate hike move by the Bank of Japan. Subsequently, the rise fueled mild yen demand on the day, even as traders continued to keep the higher returning greenback on the bid side.

Next week's data is looking increasingly optimistic and may lead to further bullish speculation for the yen as trade balance data and consumer price indexes are set for release. Both are expected to show positive results, a higher surplus for the trade balance and a continuing uptrend for consumer prices.

Should actuals meet the levels predetermined by the consensus, market expectations for a short term central bank move are surely to rise once again.