The euro rose to a six-week high against the dollar

Good Morning,

- The dollar falls on Monday to an eight-week low against a basket of currencies, as investors grew cautious ahead of U.S. economic data this week…the dollar index was last at 79.786, it hit an eight-week low earlier at 79.759.

- Asian shares: Japan's Nikkei 1.08%, Korea's Kospi -0.16%, Australia's ASX 200 -0.29% and China's Shanghai 0.10%.

- The euro rose to a six-week high against the dollar, reacting little to Monday's headline euro zone inflation number of 0.5 percent, with the core rate at 0.8 percent. The inflation report reinforced the need for the ECB to run very loose monetary policy but was short of a reading that would demand more action from a monthly meeting on Thursday.

- Euro zone inflation stayed at 0.5 percent in June, data showed yesterday, far below the European Central Bank's medium-term target of just below 2 percent.

- San Francisco Fed President John Williams reinforced these expectations on Monday, saying the U.S. central bank will probably need to keep interest rates near zero for at least another year, even as he expressed optimism the economy is on the recovery path.

- Bank of America on EUR/USD: ‘’It's 'almost' time to sell’’. The Euro Stoxx Banks Index is on the verge of completing a rather impressive 5.5m Head and Shoulders Top which says some troubles ahead for EUR/USD, says Bank of America. "A sustained break of 145.13 confirms the formation, exposing further weakness to 130.52 (pivot since Sep’13), ahead of 2yr channel support at 124.30 before renewed stabilization," BofA projects. "This should be weigh significantly on the EUR/USD. Indeed, EUR/USD is fast approaching into our 1.3676/1.3735 sell zone," BofA argues. From there, BofA looks for a top and resumption of the larger, medium, potentially long-term bear trend to 1.3104.

- The options market isn’t convinced ECB’s President Mario Draghi will succeed in his aim to weaken the euro. The cost of bullish wagers on the Euro Currency Trust (FXE) rose to the highest level since September 2009 relative to bearish bets last week, according to data compiled by Bloomberg.

- The Bank of Japan's "tankan" survey showed major Japanese companies plan to increase spending more than expected this year, adding to signs the country's economic recovery will get back on track after an expected slip in the second quarter.

- The Reserve Bank of Australia kept its benchmark cash rate at a record low as fiscal consolidation adds to a mining investment slowdown as a brake on growth. The key rate was held at 2.5 percent for an 11th month, Governor Glenn Stevens announced in Sydney today. The decision was predicted by all economists surveyed by Bloomberg and markets had priced in almost no chance of a move. Consumer confidence has been dented by spending cuts announced in Treasurer Joe Hockey’s May budget, which the central bank has flagged as a headwind for growth, along with a drop in resource investment.

- In his statement, Stevens said the nation’s elevated currency “is offering less assistance than it might in achieving balanced growth in the economy.”

- Chinese manufacturers signaled the first improvement in overall operating conditions for six months in June. Output rose for the first time since January, and at a moderate pace. Growth was supported by the strongest expansion of total new work since March 2013, while new export orders rose for the second month running. Increased volumes of new business led to the quickest depletion of stocks of finished goods for nearly three years, while job shedding was the weakest in three months. The HSBC Purchasing Managers’ Index posted at 50.7 in June, up from 49.4 in May, and signaled the first improvement in business conditions since last December.

Have a nice Day!