ASIA session review: Dollar retreats ahead of FOMC’s minutes

Data released (actual, consensus, previous):                

05:00 GMT Japan Consumer Confidence Index (Jun) 44.3    47.2    45.7        

06:00 GMT Germany Consumer Price Index (YoY) (Jun)  1.8%    1.8%    1.5%        

06:00 GMT Germany Consumer Price Index (MoM) (Jun)   0.1%    0.1%    0.4%        

06:00 GMT Germany Harmonised Index of Consumer Prices (MoM) (Jun) 0.1%    0.1%    0.3%  

06:00 GMT Germany Harmonised Index of Consumer Prices (YoY) (Jun) 1.9%    1.9%    1.6%        

06:45 GMT France Current Account (May) €-4.1B   _     €-2.8B        

06:45 GMT France Industrial Output (MoM) (May)  -0.4%    -0.8%    2.2%        

The U.S. dollar was lower against the euro Wednesday, with investors awaiting further insight on the U.S. Federal Reserve’s time frame for paring the pace of its monetary stimulus.

On Wednesday, investors will read through minutes from the Fed’s meeting in June for further clues as to when the central bank may start tapering its quantitative-easing program. The Fed currently buys $85 billion a month in government and mortgage bonds.

In addition to the Fed minutes, Fed Chairman Ben Bernanke is scheduled to speak at an economists’ conference in Boston on Wednesday afternoon and is expected to take questions from the audience.

Last Friday’s stronger-than-expected jobs report for June underscored expectations for tapering by the end of this year. Bernanke recently said it may end asset purchases completely by next year.

Meanwhile, the euro and the British pound have seen losses since the European Central Bank and the Bank of England last week each said their monetary policy would remain accommodative as regional leaders work to spur economic growth.

The International Monetary Fund on Tuesday lowered its growth expectations for the euro zone this year, but it raised its view on the U.K. economy.

EURO:

Also weighing on the euro, Standard & Poor’s on Tuesday cut its sovereign-debt rating for Italy by one notch to BBB, citing softening economic conditions.

EUR/USD back to $1.2780/75 after earlier it challenged $1.2760. Below losses widen to $1.2745 (Apr 24 lows) and $1.2660 (Dec 13’2012 lows). Initial resistance is near $1.2890/00 (Tuesday’s highs), then - at $1.3030 (high Jul.3) and $1.3080 (high Jul.2).

POUND:

The pound rose from a three-year low versus the dollar amid speculation a recent selloff was excessive before inflation data due next week.

Sterling dropped yesterday after a report showed U.K. manufacturing unexpectedly shrank in May, casting doubt on the strength of the recovery.

GBP/USD recovered to $1.4880 after it challenged $1.4810. Initial resistance is near $1.5020 (Friday’s Asia higihs), then - at $1.5130 (Jul 3 lows). Below recent lows support comes at $1.4780 (Feb 28’2010 lows) and $1.4720.

YEN:

Against the Japanese yen, the dollar   traded down on Tuesday. The Bank of Japan was due to wrap up its two-day policy meeting Thursday, and most analysts didn’t expect a change in the central bank’s policy or economic forecast.

USD/JPY fell to Y100.30 with support comes at Y99.90 (Friday’s low) and Y99.50 (Jul 4 low). Resistance is around  Y101.00, then - at Y101.50, above - near Y102.70 (channel line from Jun 14), then - at Y103.70 (May 22 high).

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