The greenback had a mixed session against the majors in London trading as high Eurozone inflation remained the topic du jour and UK GDP did not disappoint. German import prices rose more than expected in June, jumping 1.5% after a 2.4% increase the prior month. This took the annual rate to a whooping 8.9% from 7.9%, the highest run-rate since November 2000.

If that wasn't enough to spur speculation of further ECB rate hikes and a euro rally, council member Liebscher also offered up some hawkish comments on the topic. He said that the central bank is far from giving the all clear on the inflation development and that they haven't exhausted [their] room for maneuver. So clearly, rate hikes are not off the table. The hawkish data and comments helped take EUR/USD from an open near 1.5700 to a close around the 1.5750 area.

Sterling (GBP/USD) was bid on the news that 2Q GDP came in line with expectations at 0.2%. The pair opened the session near 1.9855 and was sitting near the 1.9970 mark at the close. Despite the fact that GDP did not disappoint, however, we are still of the view that the UK economy continues to demonstrate a very weak underbelly and believe that this latest rally in Sterling is overdone. As we have reiterated lately, we would be sellers of GBP/USD on rallies, especially into the 2.00 area.

USD/JPY was initially lower in the session, dipping to a low near 106.60 after opening around the 106.90 mark -- it would close near 107.20. Despite the poor performance in overseas equity markets the pair continues to benefit from technical support. Indeed, after closing above the 200-day moving average for 2 days in a row now, the bid tone on the cross remains. Today that level comes in at 106.93 and we would watch it very closely, for a close above there again would suggest the upside bias remains intact.

Upcoming Economic Data Releases (NY Session) Prior Estimate

7/25 12:30 GMT US Durable Goods Orders JUN 0.00% -0.30%
7/25 12:30 GMT US Durables Ex Transportation JUN -0.90% -0.20%
7/25 14:00 GMT US U. of Michigan Confidence JUL F 56.6 56.4
7/25 14:00 GMT US New Home Sales JUN 512K 503K