US Dollar
After quiet Tokyo and London sessions for the majors, it was obvious market participants were waiting on the sidelines for the weighty US releases scheduled for the morning hours in New York.  The indicators offered what is essentially a complete wrap up of the second quarter, with measures of growth and inflation well covered.  Annualized GDP garnered the complete attention of all the US capital markets.  Expectations that the economy would slow to 3.0 percent in the second quarter proved too generous.  Growth had actually slowed from 5.6 percent in the first three months to 2.5 percent.  While this was not a wide difference from economists' predictions, it was exacerbated by the fact that only last week Fed Chairman Ben Bernanke told Congress that the bank's policy board would be more sensitive to the effects of previous interest rate hikes that usually have a lag before they are reflected in the economy.  Contributing to the distinct reduction in growth were slower component reads of trade, personal consumption, residential investment and business investment.  The easing in business investment as an independent gauge was tempered somewhat by yesterday's strong durable goods orders.  On the other hand, residential investment's draw on growth was an unquestionable reflection of high lending rates.  Beyond being merely a barometer for the effects of higher interest rates, it is also a leading indicator for future spending habits.  As more and more Americans settle into their current abode, construction will slow and prices decline until equilibrium is once again found.  Since most families have the bulk of their wealth tied up in housing, the declining values will erode confidence to spend and degrade the ability to borrow against ones house.  Meanwhile, as we said yesterday, an eye should be kept on the inflationary gauges.  Core personal consumption expenditures complicated the Fed's ability to simply respond to growth issues, by accelerating 2.9 percent, the fastest it has been since 1994.  Doubling concerns over price growth, the Employment Cost Index bested expectations with a 0.9 percent increase.  With Fed Futures now pricing in less than a 25 percent chance the Federal Reserve will hike the week after next, the market will look to next Friday's NFP and earnings figures to better judge the possibility of an 18th consecutive rate hike.

Euro
With the ECB's policy meeting on deck for next Thursday, today's minor economic data provided little thrust in the euro crosses.  The biggest piece of data coming from the region was the Euro-zone's M3 money supply read.  The indicator decelerated to an 8.5 percent pace of growth last month, while the previous number was revised down to 8.8 percent.  While under normal circumstances this may lend light speculation that the reduction to inflationary stimulus would make a rate hike less necessary, the shift has long been baked into market valuations.  Elsewhere, numbers out of France were mixed.  A measure of this month's consumer sentiment rose from -28 to -25, a complimentary measure to yesterday's rise in Germany's confidence indicator.  The other French figure drawing the market's attention was June producer prices, whose annual time-frame slowed on par with expectations to a 3.9 percent of growth, while the monthly figure grew only 0.1 percent.  Next week, the European data is thick with Euro-zone confidence surveys, employment and retail sales.   However, the market will not likely act to these indicators with big moves as most traders are awaiting the results of the ECB's meeting.  As we said yesterday, the rate hike is near certainty with strengthening economic reads and Trichet's post-meeting hawkish rhetoric, but the real salt lies with whether the central bank will produce back-to-back rate hikes or stick to their current, quarterly pace.

British Pound
The British pound has little changed of its own accord Friday as the sole indicator from the country to hit the wires was GfK's monthly read on consumer confidence.  The July survey produced an unimpressive repeat of the -4 read, which in retrospect matches the highest level the indicator has seen since January.  This steady pace of confidence found its support from the strong showing in economic growth over the second quarter and recent improvements in the labor and housing market.  This aside, the real underlying theme of the market was the Thursday's MPC meeting.  There is a 40 percent chance of a rate hike, according to futures markets.  While this isn't tremendous considering the weigh in on other meetings for other central banks have often soared well into the 90's, it is significant for the BoE.  Often regarded as one of the most volatile policy groups, the certainty with which it is going into the week of the meeting is the highest it has been since 2003.

Japanese Yen
The Japanese yen saw a torrent of data in the overnight that offered the world's second largest economy an overall glow.  The first set of data, in employment, drew a mixed tone.   While the jobless rate rose to 4.2 percent, rising off of an eight-year low to its highest level since January, the job-to-applicant ratio made this increase in the overall level of unemployment require some interpretation.  The number of jobs available to the Japanese populace rose to its highest level in 14 years as more women entered the work force.  This is likely the reasoning behind the jump in the jobless rate, rather than any significant level of layoffs.  Consumer reactionary reads were also mixed.  Overall household spending fell 2.2 percent in June, its fastest pace decline since the first month of the year.  However, retail sales for the same month rose for the second consecutive month.  Furthermore, the 0.4 percent pace of annual growth was likely understated as it represents only sales at traditional brick-and-motor operations and doesn't account for the increased interest in internet shopping.  Finally, inflationary data was attracting attention from policy hawks.  National inflation for June held at its eight-year high 0.8 percent, but the forward-looking headline, July Tokyo numbers came in below expectations.  All in all this data supports a second rate hike before the year's end.

Kathy Lien is the Chief Currency Strategist at FXCM.