• Data Sparks Incremental Dollar Weakness
• Market Players Await Clear Decision On Elections
• Further Evidence of Weak Japanese Consumer Spending

US Dollar
Sentiment weakened slightly during the session as economic data was released to the chagrin of dollar bulls with both key reports released lower.  In the month of August, retail sales declined 2.1 percent, reversing the previous uptick of 1.8 percent in July.  However, looking further into the figures, one can find that consumer spending actually remained relatively supported in the month once the volatile autos component is removed.  Taking the latter in to consideration, retail sales actually climbed 1 percent versus the consensus 0.5 percent.  With that said, although overall figures look to the downside, evidence remains that activity is still brewing, lending to notions that further interest rate increases may be on the near term horizon.  More recently, traders shifted their opinion as yesterday's producer prices figures showed tame inflation in the world's largest economy.  Coupled with earlier speculation that the Federal Reserve needed a full assessment of the damage in the Gulf Coast, September 20th could prove to be a disappointment.  Additionally contributing to the notion of a stay on interest rates was today's disappointing industrial production report.  According to the government report, declines were seen in response to Hurricane Katrina disrupting oil and gas production in the Gulf region.  However, additional dips were seen in utility output and business equipment.  The smaller than expected rise comes in line with declines seen in the Institute for Supply Management report on September 1st.  Constituting 13 percent of the economy, evidence existed that th economy could be slowing from a accelerated expansion witnessed earlier in the year. 

Euro
Another day in the doldrums for the euro zone region as little economic data was released for day.  Notables included the consumer prices report Italy, in line with estimates, and overall euro zone new car registrations, vaulted higher by 9.6 percent for the month of August.  As a result, with little fundamental considerations, traders look to place their focus later on in the week, when overall euro zone consumer prices report is released along with industrial production figures for Italy.  Additionally, as we approach the impending general election this weekend, traders will be sure to keep a watchful eye as events have shifted slightly from previously depicted.  Casted as the shoo-in candidate, Angela Merkel, leader of the Christian Democrat Party, has seen her lead in the polls dwindle from a double-digit head start to a now thin majority over the Social Democrats and incumbent Chancellor Gerhard Schroeder.  Similar to the most recent Japanese elections, the entrance of Candidate Merkel lends some hope to Europe's largest economy with many hoping that a simple change of leadership can reverse the record unemployment and overall disappointing productivity that has plagued the country. Additionally, if Merkel should post a win, this would be the first time that a woman would hold the Chancellor position.   Ultimately further indecision in the underlying spot currency looks to persist until a clear winner is decided this weekend.

British Pound
Employment data garnered the daily focus as both the claimant count rate and average earnings data for the economy were released earlier on.  According to the Office for National Statistics, U.K. jobless claims rose for the seventh straight month in August, the longest streak for 13 years, propping a 2.8 percent claimant rate.  Rising less than half the expected figure and suggesting a plateau in labor demand, earnings looked to be adversely effected, rising 3.9 percent in the three months ending in July.  The figure, excluding bonuses, is the slowest rate of growth since February 2004 and may contribute further to the region's consumer consumption woes.  As a result, attention will turn to tomorrow's retail sales figures in confirming any further declines in individual demand.  Now although a back burner topic in the mind of central bankers, continued weakness in the economic factor may prompt further interest rate cut considerations by the Bank of England, despite the more hawkishly bias.  With inflationary pressures still relatively high, policy officials have elected to take into consideration the ill effects of rising prices than the benefits of climbing consumption.

Japanese Yen
A followup of disappointing data today as traders and economists alike witnessed bankruptcies rise by 5 percent in the land of the rising sun.  A persistent concern, the increase reverses the 8.8 percent decline in the previous month.  Although not a cause for alarm, the occurrence does raise a few eyebrows as Prime Minister Koizumi has made it a priority to reduce the number of such situations.  Additionally, further evidence that consumers seem more reluctant to consume came from today's report on Tokyo department store sales.  Comparatively rising 1.2 percent in the month of July, the figure dipped a whole 6.1 percent causing some to question the validity of recent notions that expansion in the world's largest economy is being underpinned by consumer spending.  Ultimately, traders will likely take tomorrow's consumer confidence survey with more than just a grain of salt as nascent expectations are for sustained optimism.  However, any dips to the downside could contribute to whole new suggestions in addition to the Nikkei not being able to confidently test the 13,000 psychological level today.