The fx market trade calm

Good Morning,

- The fx market trade calm, after long weekend due to US independence day on Friday...

- Asian shares: Japan's Nikkei -0.37%, Hong Kong's Hang Seng -0.07% (07:06 GMT), Korea's Kospi -0.23%, Australia's ASX 200 -0.10% and China's Shanghai 0.03%.

- The dollar edged higher on Monday and touched its highest level in more than a week. The dollar index rose to 80.340. It touched a high of 80.351 earlier, its highest level since June 26.

- ECB Christian Noyer warned euro-area governments against giving up on deficit reduction or looking to use a debt build-up to bolster growth. “No country today has sufficient credibility to put in place a strategy” of financing public infrastructure with a major debt increase. “Decades of deficits have created profound skepticism. The current balance is fragile and any significant deviation from the current budget trajectory would probably be paid for, in a volatile environment, with higher borrowing costs.”

- The ECB will keep interest rates very low for a long period of time to ensure monetary stability but euro zone governments must do their part to boost growth and cut debt, ECB Benoit Coeure said. “The euro zone has a major investment deficit”, adding that governments must also "invest in Europe" by cooperating more closely - another condition for stability. Saying the current economic situation of high debt, high unemployment and weak growth was very worrying, "The only way out is by investing." But this should not be done by "piling more debt on old debt"

- In May 2014, German production in industry was down 1.8% from the previous month on a price, seasonally and working day adjusted basis according to provisional data of the Federal Statistical Office (Destatis). In April 2014, it decreased a revised 0.3% from March 2014.

- Credit Suisse on EUR/USD: We remain bearish and the break below 1.3640 opens up a retest of key support at 1.3487/77. EURUSD has found further selling at the 55-day average, at 1.3693, and the removal of the 1.3640 level has set a top and turns the attention lower again. Support moves to 1.3576 next, below which can aim at "neckline" support at 1.3513/03, with scope to more important levels at 1.3487/77 – trend line support and the early year low. A break of this level is needed to compete a large “bear wedge” pattern, and now also a further top. Above 1.3640/42 aims at 1.3665, but with a break through here needed to retest 1.3693/3701.

- Barclays on AUD/USD: Investors following short-term strategies should consider buying AUD/USD this week, advises Barclays Capital in its weekly FX pick to clients. The trade is a tactical play into the AU employment report on Thursday. "Dovish talk from the RBA and the strong US employment report weighed on AUD last week. Australia’s employment report (Thursday) is the next key local risk event and our forecast suggests a slight upside risk for the AUD," Barclays projects. "Our technical strategists note that the break below nearby support in the 0.9350 area signals further a short-term squeeze to the downside. In their view, the risk is for a move lower towards a confluence of support in the 0.9200 area," Barclays notes. "We look for buying interest near there to keep the range of the past three months intact and the overall focus higher, toward targets near 0.9760," Barclays adds.

- Japan's leading index declined for the fourth consecutive month in May, preliminary data from the Cabinet Office showed Monday. The leading index fell more-than-expected to 105.7 in May, the lowest score since February 2013, from 106.5 in April.

- Watch today: Europe, German industrial production figures and a euro zone sentiment report.

Have a nice Week!