The dollar declined to a one-week low against the euro and yen on
speculation a Federal Reserve report today will show a contraction in
U.S. manufacturing, encouraging the central bank to delay increasing
interest rates. Manufacturing in the Philadelphia area probably
contracted for the seventh month in June. The Federal Reserve Bank of
Philadelphia's general economic index will be at minus 10, from minus
15.6 in May, according to a survey.
The U.S. currency held near a one-week low versus the Australian and
New Zealand dollars on concern credit market losses and record oil
prices will prolong a U.S. economic slowdown.
The yen and the Swiss franc strengthened as Morgan
Stanley's earnings dropped 57 percent, renewing concern credit
market losses will deepen. A drop in stocks led traders to
reduce investments in higher-yielding assets funded in Japan and
Switzerland, a practice known as carry trades. In such trades,
investors get funds in a country with low borrowing costs and
buy assets where returns are higher.
EUR/USD gained from $1.5525 to $1.5575.
GBP/USD traded within $1.9580/1.9610.
USD/JPY retreated from Y107.85 till Y107.55.
UK data at 0830GMT sees the May retail
sales data, which is expected to show a 0.2% increase on the month and
a rise of 4.2% on the year.
Central bank meetings are taking place at the Swiss National Bank,
which announces its interest rate decision at 1200GMT (publishing the
quarterly monetary
policy assessment at the same time) and the ECB. US data also starts at
1230GMT, when initial claims are expected to fall 9,000 to 375,000 in
the June 14 employment survey week.
US data continues at 1400GMT, with the Philly Fed Business
OutlookSurvey for June and leading indicators. The Philadelphia Fed
index is expected to rise to a reading of -11.4 in June, yet another
month indicating outright contraction. The leading indicators index is
expected to hold steady in May on the positive impact of a steeper
yield curve and rising stock prices.