Professional system trader Art Collins shares his daily biases in the index, bonds and currency futures markets for July 11.

The world of constantly expanding credit and rising asset prices is finished.

The currency market was fairly quiet today with the US dollar rallying against some currencies and falling against others.

The only significant event risk on Friday will be from the release of the Canadian net employment change.

The unstoppable forces of inflation continue to smash into the immoveable lines of deflation.

In a week devoid of any significantly market moving data, there has only been one clear factor driving the US dollar – stocks.

Currently, the markets are betting that the Bank of England will raise the Bank Rate by 25 basis points to 5.25 percent by the end of the year.

Gambling on rising housing prices through Freddie Mac and Fannie Mae may just be fatal.

Federal Reserve Chairman Ben Bernanke has the market guessing about whether interest rates will be increased this year.  His comments this morning about increasing the duration of emergency lending to investment banks reduces the chance that borrowing costs will rise.

The sharp drop in oil prices has helped to strengthen the US dollar.  Pending home sales dropped more than expected, but it has failed to put a dent in the greenback which continues to follow equities higher.  The dollar is becoming a safe haven bet as the Federal Reserve reminds us that they will be the lender of last resort.