FX Closing Comments

Trading in the FX markets was tempered today, with the Dollar Index down 9 ticks. The threat of increasing global tensions gripped many markets today, as turmoil worsened in the Middle East. It is possible to argue that the Dollar might benefit from some "safe haven" buying, although none materialized today. Part of the concern is that capital inflows may have dipped again in May after the Bank of Japan reveled that Japanese purchases of U.S. bonds were down in May. Fed custody holders were also down in May. This is worrisome news in light of May's record trade deficit. Tomorrow will bring us U.S. retail sales data, which is expected to show a.5% gain. The preliminary July Michigan confidence survey is also due and expected to have dipped form 84.9 to 83.5. The other big event risk is tonight's decision from the Bank of Japan about their interest rate policy. A quarter-point hike is expected and an interesting commentary is also anticipated.