10:00 GMT- July 28 (global-view.com) Forex markets are continuing to look for direction in the dog days of summer. At the moment, the focus remains on equity markets as the only recently reliable source of market direction. Quarterly earnings figures out of the U.S. generally have been disappointing on the top line, but due to heavy cost cutting, th bottom lines for many have been positive. This state of affairs was seen as negative out of the box, but now ois being viewed as more constructive.

The increase in the Australian CPI data was quite a bit less than expected and has taken off the table for now any risk of another RBA rate hike this year. Forex Trading in has seen the USD tracking equity prices. The economic calendar today in the U.S. looks to be heavy.

CALENDAR

UPCOMING DATA HIGHLIGHTS: In North America, the U.S. will see weekly mortgage statistics, Durable Goods orders, weekly energy inventories, a five year note auction and the Fed's Beige Book.



The EURUSD is steady on the day and the GBPUSD is unchanged. The EURGBP cross is level. Traders are maintaining a close watch on the European sovereign debt situation. In the GBP, the U.K. new government is weak. A second election may not be far away..

The EURCHF is unchanged. SNB intervention tactics are confusing. Periodically, the SNB has taken a strong stand in supporting the EUR against the CHF. Flows out of the EUR into the CHF remain an issue for the SNB.

The USDJPY is steady and the EURJPY cross is also unchanged. While Japanese public finances are a mess, analysts point out that most JGBs are owned by Japanese, so Japan is not dependent on foreign investment. The government has been pressed the BOJ to promote growth and favors a lower exchange rate.

Some traders focus intently on the Japan vs. U.S. 2-yr note spread (only the U.S. 2-yr moves much).





The risk trade continues to be turned on and off almost daily. As for the commodity currencies (CAD, AUD and NZD), they are mixed vs. the USD. The Bank of Canada raised interest rates again by 25bps. The BOC sent mixed signals afterwards. A strong CAD eases the pressure on the Bank of Canada to tighten. In Australia, RBA is unlikely to tighten in August. The RBNZ is also currently in a tightening mode. Oil and gold are up. Gold is still favored as as refuge from paper money. We have favored AUD, CAD, gold and oil recently, but doubts are creeping in as deflationary pressures mount.

EQUITIES & INTEREST RATES

Equities and Bonds are also risk trades. Far East equities closed higher. European bourses are up. U.S. equities are up. The U.S. 10-yr was last 3.05%, -1 bps.

Bonds are a counter to risk trades because risk investments must be financed. When the cost of money moves up (higher interest rates), the return and allure of risk trades such as equities falls.