By DailyFX – Both the euro and yen lost most of their Asian session gains in quiet consoldative trading as the week commenced. … … The euro, which climbed to a high of 1.2880 in Tokyo retreated to 1.2850 in the absence of any fresh EZ eco data and mildly bullish support for the greenback from oil which continued to trade below $60/bbl.

The yen meanwhile staged a modest rally in Tokyo trade but gave up most of its gains as
Japanese data released throughout the session provided little positive value.
Domestic CGPI printed at 0.3% far lower that 0.1% expected recording the first
monthly decline in sixteen months hardly a screaming case for further rate hikes
from the BOJ. The Current Account, as expected, registered a rise to 2 Trillion yen
from 1.4 Trillion yen the month prior as lower yen helped boost exports while
Consumer Confidence improved to 48.4 from 46.6 in September but remained below the
50 boom/bust level. Dealers reported that order flows were generally light with
most speculative accounts awaiting tonights Japanese GDP data. Japans Q3 GDP
is expected to match the anemic 1.0% growth rate of Q2, but some traders fear the
possibility of an even a weaker result and that negative bias may pressure the unit
for the rest of the day.

Trading may be uneventful for the rest of the day, as US calendar is essentially
barren, but should pick up markedly by tomorrow when both the ZEW and US Advanced
Retail Sales hit the tape. The dollar suffered last week on talk of Central Bank
diversification with EUR/USD breaking out convincingly above the former equilibrium
level of 1.2700. The pair now stands within striking distance of the psychologically
important 1.3000 figure, with many specs no doubt itching to trigger the large
amount of stops resident at that barrier. But with EZ growth beginning to show signs
of slowdown, European finance ministers will not look kindly at such fast
appreciation for the euro remembering vividly the moribund growth of 2005 which
resulted after the rapid rise in the EUR/USD rate at the end of 2004. Therefore
this time the move towards 1.3000 is unlikely to occur with ease unless US data
proves truly negative and speculative flow overwhelms any Central Bank offers.

By DailyFX