The Forex market is fairly quiet this morning as prices aren't really moving in any particular direction. There was some slight USD selling during the Asian session but nothing to write home about. For prices to move substantially, more information needs to be released for the market to accurately judge and clarify risks in the current environment.

Yesterday's US jobless claims disappointed as claims rose to 484,000, 2,000 higher than the previous week. There will be a string of consumer-related data coming out of the US today for market participants to watch.

On this side of the Atlantic, there has been increasing nervousness surrounding the widening sovereign spreads across the Eurozone and the uptrend in credit-default swap pricing. We are seeing an escalating number of bearish Euro articles hitting the wire in recent days. Adding fuel to the fire was the weak Greek Q2 GDP contracting by 3.5% y/y, worse than the anticipated 3.3%. Higher unemployment in the Eurozone compounded by a fall in industrial production in both France and Germany will continue to weigh on the Euro. The cherry on top this morning was the Slovakian parliament's decision not to provide loans to Greece.

ECB Executive Board member Gonzales-Paramo commented that Spanish officials should not be too confident in forecasting growth because Spain must enact further austerity measures in order to slash their deficit by 2011. One glimmer of positive data came from Germany as Q2 GDP was revised higher to 3.7% y/y, from 2.4%. However, the overall sequence of poor data will keep any upside to the Euro capped for the time being.

In Japan, no new comments on Yen strength were released. However, Japanese news agencies are reporting that PM Kan and BoJ Governor Shirakawa will meet early next week with a discussion about recent Yen appreciation at the top of their agenda. USDJPY continues to be driven principally by US yields and therefore the currency pair will be highly reactive to any US data surprises. As already mentioned, we do believe that if the trend continues, Japanese officials will take active steps to depreciate the Yen.

Otherwise, the Agro commodity complex continues to draw the market's attention after spectacular runs in Wheat and Cocoa contracts. Russian President Dmitry Medvedev affirmed that severe droughts had killed grain sowings on a quarter of the area planned (. The positive run in commodities combined with recent, strong Australian trade surplus (fueled by iron and coal demand from China) should give commodities currencies a boost and lend some support to risk appetite. Keep an eye on AUDUSD.

Today's FX Market will likely have one eye on EU & US economic data and the other on EU rates...and don't forget today is Friday the 13th.
Forex-Chart

Today's Key Issues (time in GMT):
07:30 SEK New Orders
09:00 EUR Foreign Trade -3.0 prior
09:00 EUR Preliminary GDP, q/q 0.7 exp, 0.2 prior
12:00 PLN Poland: CPI, 2.3 prior
12:30 USD CPI, 0.2 (1.2) exp, -0.1 (1.1) prior
12:30 USD Retail sales, % m/m 0.4 exp, -0.5 prior
13:55 USD U. Michigan consumer sentiment index 69.8 exp 67.8 prior
14:00 USD Business inventories, 0.3 exp, 0.1 prior
15:30 USD Kansas City Fed President Hoenig (FOMC voter) speaks