There was limited price action today as investors remained sidelined ahead of three big events this week. Major currencies mostly traded in tight ranges during the European session, while in the absence of major economic releases, the market focus has been on the start of the second round of the Brexit negotiations, the European Central Bank and the Bank of Japan meetings on Thursday.
The greenback managed to slightly recoup against most majors following the sell-off on Friday amid the disappointing inflation and retail sales figures. The Empire State manufacturing index published today added to the negative US story. The New York Fed's barometer on current manufacturing conditions slid in July to 9.8 against expectations of 15.0 and far below the prior month's level of 19.8. The dollar fell slightly against the yen upon the release of the numbers, but managed to recover quickly after. Dollar/yen was last trading at 112.41.
Yearly inflation in the eurozone inched lower in June, the official Eurostat reading confirmed today. Annual consumer prices rose 1.3% in June, in line with expectations, but below the 1.4% gain in May. By contrast, core inflation, which strips out volatile components, rose 1.1% from 0.9% in the prior month. As a result of a slowdown in energy prices (on a monthly basis the prices were down 0.9%), inflation tempered in June from the prior months. However, annual inflation accelerated for the services sector to 1.6% from 1.3%. ECB policymakers are scheduled to discuss monetary policy and make decisions on interest rates and QE on Thursday. The euro was under soft pressure against the US dollar today. Euro/dollar fell to last trade at 1.1466 ahead of the US session.
The uncertainties surrounding the UK's exit from the EU have been putting pressure on sterling against the greenback as the second round of Brexit negotiations starts today. Pound/dollar was last trading at 1.3070.
In Canadian news, home resales fell 6.7% in June from May, the largest monthly drop since 2010. On the other hand, foreign investors increased purchases of Canadian securities in May to reach C$29.5 billion, three times the expected level. The loonie reversed losses against its US counterpart from the Asian session and gained during European trading. Dollar/loonie was last trading at 1.2628, hitting a fresh 14-month high.
Oil prices were gaining for most of the day, but came under pressure as the European session was about to end. The addition of fewer drilling rigs in the US supported earlier gains, however Brent fell below $49 a barrel to last trade at $48.87 while WTI was at $46.45 a barrel.
Following Friday's dollar sell-off, gold prices have been trending upwards. At $1,235.50 an ounce ahead of the European close, the precious metal has been trading above the $1,230 level for most of the day.