American focus: Manuf. ISM couldn’t support USD.[E]

USD could consolidate a little after last week sales resulted 2% dollar drop versus euro. Weak manuf. ISM suspended dollar retracement and brought more speculations on economy growth slowdown and possible pause in Fed tightening.

Economic growth is moderating, the central bank said after lifting the overnight lending rate between banks by a quarter-percentage point to 5.25%. Besides Fed accompanying statement didn’t hint on necessity of further rates lifting and emphasized, that the further actions of the central bank will depend on the economic data. Meantime June ISM data showed decrease to 53.8 from May 54.4.

EUR hasn’t changed after June PMI report showed data climbed to 6 years high bolstering speculations on ECB monetary policy. Index climbed to 57.7 from 57 in prior month. At least six ECB council members in the past two weeks signaled concerns about faster economic expansion is fueling inflation. On traditional press-conference after ECB meeting this Thursday ECB President Jean-Claude Trichet may signal the bank’s ready to raise rates in August. The ECB has boosted rates three times since December, to current 2.75%.

The yen gained earlier after the Bank of Japan's quarterly Tankan survey showed Japan's largest companies plan to increase investment at the fastest pace in 16 years. The yen two-days rally versus dollar lifted Japanese currency 1.8% as analytics believe strong Tankan will push BOJ to end zero-point rates policy.

The Wall Street continued Friday’s rally today. The market was driven by economy data issued recently. GM continues Friday’s lift after Kirk Kerkorian's stress to begin talks on a possible alliance between Renault and Nissan Motor Corp. On Monday Renault’s Board approved a possible merge with GM. EADS fall despite messages on dismissal of two CEO.

US financial markets will be closed on Tuesday June 4^th on Independence day celebrations.