Dollar Little Moved Ahead Of Tuesday's ISM (page 1 of 2)

US Dollar

The summer months' lack of volatility is taking its toll on the dollar-backed majors. Point in case, the EURUSD has traded within a 40-point range over the past 24 hours. But aside from the odd trader taking his vacation, today's lack of momentum had a very real fundamental root.

From the indicator front, the final regional manufacturing read helped to solidify the uncertain nature of tomorrow's ISM read. The headline figure for the Chicago PMI factory activity survey printed at 57.9, which was a better outcome than the expected contraction to 56.0 but not exactly a bullish flag from the usually volatile read.

Furthermore, any bidding potential that could have been offered from the overall read was sabotaged by the prices paid component. According to the official release, the gauge measuring the prices paid for raw materials fell from 89.0 in June to 86.9, providing a hint of relief from the recent strength in separate inflation measures. Instead of reacting to this lesser indicator's intricacies, traders decided to turn their attention to tomorrow's nationwide ISM figure.

Not only will the indicator provide a credible measure of manufacturing activity for the country, it also comes with respectable employment and prices paid reads of its own. Another point of dissatisfaction for the market today, was the commentary from Fed presidents. St. Louis Fed President William Poole, a non-voting member of the board, mentioned that he is personally split "50-50" over whether additional rate policy will be needed for August's meet.

He did however, mention that price stabilization is the Fed's primary concern when considering monetary policy, a comment that brought up Friday's PCE jump in more than a few minds. On the other hand, San Francisco Fed President Janet Yellen (a voting member) stuck with her usual dovish commentary by saying the medium-term inflation should moderate with below trend growth.

Euro

A flurry of reports did little to boost the underlying Euro currency in the New York session as trading volume and activity remained light on the last day of July. The day's docket included German retail sales data that was surprisingly to the upside as both Euro zone industrial confidence and consumer price index estimates improved.

For the month of June retail sales in the Euro zone's largest economy rose at a 1.9 percent monthly clip. Boosted by World Cup retail spending, the current figure reverses the 2.2 percent drop witnessed in May, adding to better prospects of a 25 basis point rate hike at this week's upcoming European Central Bank meeting. Industrial confidence also improved, rising to a printing of 4 versus consensus estimates of a 2 showing.

Coupled with a consumer price estimate report that showed a 2.5 percent consumer price increase in the month, the session's surveys are likely to purport policy making justification of rising inflationary pressures amid stronger prospective demand in the near term. Considering President Jean Claude Trichet's hawkish stance as of late, the possibility of such a scenario ranks high.

As a result, the sentiment is likely to persist in the absence of any pertinent upcoming Euro data in the next 48 hours, potentially keeping the underlying range bound. Taking a look ahead, it seems like clear sailing to the decision, set aside from the unemployment rate figure and a survey on producer prices.

British Pound

Trading was somewhat muted on the day in the British pound, in line with movements in the broader market.