The euro traded sideways in Asia but with a soft undertone on Monday after Friday's retreat fm 1.2613 to 1.2528 in NY trading following release of weaker-than-expected U.S. jobs data. Short-term speculators sold euro in Australia at 1.2563 to 1.2521 b4 trading inside the range. However, the single currency ratcheted lower after meeting renewed selling at 1.2558 in European morning n formed an intra-day low at 1.2510 in thin European mid-day as markets in the U.S. were closed for Independence Day. Euro zone Services PMI falls to 55.5 in June fm May's 33 mth high of 56.2. EU retail sales in May rises 0.2% in May vs forecast of -0.1%. The data had little impact on the market as focus was on the rate decision meeting on Thursday. The ECB is widely forecasted to leave rates unchanged at 1.00% as investors think euro zone economy is not strong enough to warrant an interest-rate hike n that will eventually end the recent rally fm 1.1876.
Both ECB President n French Finance Minister made comments at a financial conference on Sunday in AIX-EN-PROVENCE, France. Trichet said reducing EU deficits and putting in place sustainable fiscal policies are key to restoring confidence, which will in turn foster growth whilst Christine Lagarde said European stress tests will show European n French banks to be solid, the results of these tests target around 100 of the Continent's largest banks will be published on July 23.
Similar to euro, cable retreated fm Friday's 1.5230 high to 1.5155 following the release of U.S. jobs report n sterling traded inside 1.5165-1.5205 in Asia on Monday. However, the British pound dropped sharply after the release of weaker-than-expected UK service PMI as the figure suggested the country's economic recovery remained fragile. UK services PMI fell for the third time in 4 mth to 54.4, the lowest lvl since Aug, 09, in June fm 55.4 in May. Cable hit an intra-day low of 1.5090 in European mid-day b4 recovering. Cross selling in sterling also weighed on cable as eur/gbp pair rebounded fm 0.8253 to 0.8297 n gbp/jpy declined fm 133.66 to 132.41.
Economic data to be released on Tuesday include: Australia Trade balance, RBA rate decision, Japan Leading indicators, Swiss CPI, Canada Building permits, U.S. ISM non-manufacturing.