US session review: Euro recovered a bit

The dollar gained versus the majority of its 16 most-traded peers before U.S. data forecast to show tomorrow that retail sales rose for a fourth month, backing the case for the Federal Reserve to reduce stimulus.

Later Portugal was in focus. Following an article published in Der Spiegel over the weekend and suggesting that the Bundesbank sees a need for additional rescue funds for Greece, the German Finance Ministry denied having any information on the issue.

According to the finance ministry´s spokesman Martin Kotthaus: “The latest troika report finds that Greece is making good progress with its reforms. As you know, the current program runs until 2014, so I find it difficult to speculate now about what will happen in 2014.”

Kotthaus added that Greek reforms were progressing well and that the country was expected to overcome the crisis. He stressed that it was not possible to predict what would happen in several month's.

In its article Der Spiegel claimed that the document on Greece was prepared for the German Finance Ministry and the IMF by the Bundesbank and that it stressed the need for coming up with a new bailout program for the indebted country at the beginning of 2014 at the latest.

EURO:

The euro recovered from daily lows.

EUR/USD back to $1.3300 and remains higher. Initial support comes at session lows on $1.3276, below - at $1.3230 (Aug 6 lows) and $1.3180 (Aug 2 lows). Resistance comes at $1.3340 (50% of the recent decline from Aug 8), then - at $1.3400.

POUND:

The pound held steady within the narrow range.

GBP/USD consolidates near $1.5480, a bit higher session lows on $1.5460 (initial support). Below losses may widen to  $1.5400/90 (recent lows) and $1.5300. Minor resistance comes at $1.5520 (today’s highs), then - at Friday’s highs at $1.5570 region.

YEN:

The yen rose a bit in NY after earlier it dropped versus dollar following the key economic adviser to Mr. Abe, Yale University Professor Mr. Koichi Hamada said about his disappointment on the latest Japanese growth figures.

The policy maker, though to be one of the most influential figures to Japan's PM Mr. Abe, said there is no need to hurry with the sales tax hike after the weaker-than-expected Q2 GDP. Mr. Hamada, who has been supporting the idea of implementing an incremental approach to the sales tax increase, added that raising sales tax as planned might harm the economy. According to Mr. Hamada, one option might be to delay the tax hike by one year.

USD/JPY failed to break above Y97.00 and retreated to current Y96.45. Generally rate remains above recent lows on Y95.80 (initial support). Below losses may widen to Y95.20 (Jun 7 lows) and Y93.80 (Jun 13 lows). Initial resistance comes at daily highs on Y96.90/00, above - at Y97.60 (Jul 31 lows) and Y98.80.

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