USD - The dollar has consolidated in its recent ranges as stocks rebound after yesterday's modest selloff. The USD has also received a boost from supportive economic data released this morning. Retail sales advanced for the first month in four rising 0.8% versus last month's 0.7% contraction. The measure also beat the consensus forecast for a more modest gain of 0.3%, easing some concerns that consumer spending, the largest part of the economy, is losing momentum. However, the outlook for growth remains moderate as unemployment hovering above 8% continues to limit any surge in sales. Meanwhile, the producer price index came in slightly higher than expected at 0.3% versus 0.1% in the previous reading, and higher than the 0.2% that was expected. Surprisingly, the core measure with the volatile food and energy components stripped out was up by even more at 0.4%. While the index dropped on an annualized basis, the uptick in inflationary pressure limits any immediate need for the Fed to step in with a third round of quantitative easing. Investors will be paying particularly close attention to tomorrow's CPI report to see if rising wholesale prices translated into higher price tags. As such, the dollar will likely remain supported in the near term.

EUR - The euro is slightly weaker this morning, but remains well supported within its recent narrow ranges. Investors have been encouraged by GDP reports out of France and Germany which showed growth of 0.3% and 1.0% respectively. However, growth in the core economies wasn't enough to support the region with Eurozone GDP contracting by 0.2% in the second quarter dragged down by Spain and at least five other member nations that have now slipped into recession. Meanwhile, debt yields in both Spain and Italy pushed modestly lower on signs of German approval of the ECB's plans to buy the nations' bonds. Spanish PM Rajoy also signaled his willingness to seek ECB assistance "if it seemed reasonable." ECB President Draghi reiterated that the details of the plan will be discussed at subsequent Bank meetings, but that they would focus on shorter-dated securities and only intervene in tandem with the region's "bailout" funds. While the limited details of the plan have been enough to drive back yields on the region's bonds, private sector investors remain apprehensive to buy into it just yet. Money managers are still opting for record low yields on AAA-rated German bunds, unconvinced that the ECB plan is anything more than a stop-gap measure for Spain and Italy.

GBP - Sterling is marginally higher against both the USD and EUR this morning after a report showed British inflation unexpectedly accelerating in July. CPI rose 0.1% after last month's 0.4% decline and the consensus forecast for a 0.1% contraction. Retail prices rose by a similar measure after falling 0.2% in the previous month. Investors are thus paring back expectations of further BoE easing as inflation has kept the Bank on hold before.

JPY - The yen has fallen back towards the bottom of its recent ranges against the dollar this morning after the positive US retail sales release. The data caused the yield gap between US Treasuries and similarly dated JGB's to widen to the most since early May, which in turn is reducing the yen's appeal. Nevertheless, the yen remains well supported against its riskier counterparts with technical studies indicating that it may retest an 11-year best against the EUR in the near term.

Commodity Currencies - The commodity linked currencies are mixed this morning with the CAD and MXN gaining while the AUD and NZD both fall. Raw goods are also mixed with oil rising to $93/bbl, copper flat at $336/lb, and gold falling to $1600/oz. The CAD rose to a fresh three-month high against the USD on the rising price of oil - Canada's main export - and after the positive retail sales results out of the US. Similarly, the MXN edged higher against its North American counterpart as improved US retail sales are supportive of the Mexican export market. The AUD pushed lower, albeit within its recent ranges, as stocks and commodities struggle to maintain gains.