Today's trading in the Forex markets featured choppy, two-sided trading. Early in the New York session the Dollar strengthened as a pair of bearish U.S. economic reports sent the Dollar higher and the stock market lower. Later in the session, the Treasury announced another $75 billion auction. This news triggered a late session sell-off in the Dollar.

Today's U.S. ISM report fell more than expected indicating that the economy may not be as strong as previously estimated. In addition the ADP employment report showed a loss of 350,000 jobs in July which is an indication that Friday's Unemployment Report will show a further rise in the jobless rate. Both of these reports contributed to the early strength in the Dollar as traders cashed in their long higher yielding currency positions.

The GBP USD was the strongest currency pair. This market was buoyed by speculation that the Bank of England would most likely announce the end of its asset buyback program. This five month program provided liquidity and economic stimulus when needed, but now that the economy is turning around may not be necessary.

Additional support for the British Pound came from a better than expected industrial production report and the news that home prices had risen. Both of these reports indicate that the U.K. economy may be well on its way to recovery.

The EUR USD also rose late in the session following a weaker trade early. The Euro made a new high for the week, but was unable to attract any fresh buyers. Speculators may be lightening up ahead of the August 6th European Central Bank meeting. Early talk is that the ECB will announce that interest rates will remain the same. The surprise could come in the commentary. Since the Euro Zone economy has shown improvement since the last meeting, many traders expect a hawkish commentary from ECB officials.

The USD CAD confirmed yesterday's closing price reversal bottom but still managed to close lower for the day. Weak energy and equity markets helped trigger an early session rally, but buying quickly dried up when these markets could not follow-through to the downside. This market may still be in a position to form a short-term bottom. Speculators seem worried that the Bank of Canada is getting concerned about the rapid rise in the Canadian Dollar and its possible negative effect on the Canadian economy.

Trading in higher yielding Forex markets was mixed today. Traders seemed confused as to which side of the market to take as stock and commodity markets had a two-sided trade. Speculators in the AUD USD and NZD USD who were not certain as to whether they should book profits after the rapid rise, put these markets in overbought territory. It seemed at times today that traders were also not sure as to what was driving equity markets off the lows.

Late in the session, the Aussie and Kiwi strengthened after the Treasury announced another auction and the Dollar sold-off, but the inability of the equity markets to close positive weighed more on the AUD USD and NZD USD than the bearish Treasury news.