Economic data will dominate the headlines this week with traders eyeing the April jobs report scheduled for the end of the week. The greenback traded higher against the majors in the Monday session, pushing the euro toward the 1.32-figure and edging up against the Canadian dollar around 1.01. The US equity bourses advanced on the session, with the Dow Jones, Nasdaq and S&P all improving by more than 1.4% while crude oil held steady just above the $86-per barrel level.
China announced an increase in the commercial bank reserve requirement ratio by 50-basis points for large banks to 17.0%, effective May 10th. In doing so, the PBOC aims to temper inflationary pressure in the economy and curb potential asset bubbles, as well as drain excess liquidity from the financial system. It remains to be seen if and when the government will revalue the yuan. Nonetheless, hot money continues to flow into China as speculators bet on a stronger currency, thus prompting the government to implement measures to stem the flows.
The US reports were mixed on the session, which included personal income, personal spending, personal consumption expenditures, construction spending and the April manufacturing ISM. The March personal consumption and income data were largely inline with estimates, printing at 0.5% and 0.3%, respectively. The PCE price index edged up by 0.1% on a monthly basis from a flat reading previously and increasing by 2.0% on an annualized basis. Meanwhile, manufacturing ISM surged to its highest level since June 2004 at 60.4 and beating estimates for an improvement to 60.0 from 59.6 from April.
The euro continues to remain under pressure despite Sunday's accord to extend a 110 billion euro bailout package for Greece as traders question whether the Greek government will succeed in passing the fiscal austerity measures.
EURUSD trades just beneath the 1.32-foothold with interim support eyed at 1.3160, followed by 1.3130 and 1.31. Additional floors will emerge at 1.3070, backed by 1.3040 and 1.30. On the topside, resistance will emerge at 1.3230, backed by 1.3265 and 1.33. Subsequent ceilings are eyed at 1.3340, followed by 1.3380 and 1.34.