The greenback was higher in London trading on a bad batch of data across the pond and a small pullback in oil prices. Oil slipped a little more than $1 towards the $120.15/bbl area just as the London session came to a close. Meanwhile, economic data out of Europe dealt the markets a dose of reality and showed that economic deterioration continues there, despite the better than expected numbers of late.

Data in the Euro-zone went back to showing continued weakness. Industrial new orders for June fell -0.3% on the month after a downwardly revised -5.4% decline in May. This took the annual run-rate to a pitiful -7.4% from -4.4% prior and the worst print since December 2001. This helped the buck rally and EUR/USD slipped about 35 pips in the session towards 1.4840 at the close.

UK GDP came in below expectations at -0.1% in the 2Q preliminary release and this took the annual growth rate to a paltry 1.4% from 1.6%. The main takeaway is that private consumption fell -0.1% while the market was looking for an increase of 0.5%. This highlights the deterioration in the UK private sector and keeps the risk of a rate cut from the Bank of England on the table. GBP/USD plunged more than 150 pips on the news towards a close near the 1.8590 mark. We would still be sellers of GBP/USD on strength as we feel that the economic deterioration has not been fully priced in.

Upcoming Economic Data Releases (NY Session) Prior Estimate

8/22/2008 14:00 GMT US Fed Chairman Bernanke Speaks at Jackson Hole