EU session review: Euro advances to three-week high

Data released:
06:00     Germany     Retail sales (May) real adjusted    -2.8%    -    0.6%
06:00     Germany     Retail sales (May) real unadjusted Y/Y    2.2%    -    3.6%
06:00     UK     Nationwide house price index (June)    0.0%    0.2%    0.3%
06:00     UK     Nationwide house price index (June) Y/Y    -1.1%    -1.3%    -1.2%
06:45     France     PPI (May)    -0.5%    0.4%    0.8%
06:45     France     PPI (May) Y/Y    6.0%    6.5%    6.4%
06:45     France     Consumer spending (May)    -0.8%    0.6%    -1.8%
06:45     France     Consumer spending (May) Y/Y     -1.8%    -    -0.1%
07:55     Germany     Unemployment (June) seasonally adjusted    -8K    -16K    -8K
07:55     Germany     Unemployment (June) seasonally adjusted, mln    2.967    -    2.975 (2.974)
07:55     Germany     Unemployment rate (June) seasonally adjusted    7.0%    7.0%    7.0%
07:55     Germany     Unemployment (June) seasonally unadjusted, mln    2.893    -    2.960
07:55     Germany     Unemployment rate (June) seasonally unadjusted    6.9%    -    7.0%
08:00     EU(17)     M3 money supply (May) adjusted Y/Y    2.4%    2.2%    2.0%
08:00     EU(17)     M3 money supply (3 months to May) adjusted Y/Y    2.2%    2.1%    2.1%
09:00     EU(17)     Harmonized CPI (June) Y/Y preliminary    2.7%    2.8%    2.7%
09:00     Italy     CPI (June) preliminary    0.1%    0.1%    0.1%
09:00     Italy     CPI (June) preliminary Y/Y    2.7%    2.7%    2.6%
09:00     Italy     HICP (June) preliminary Y/Y    3.0%    3.0%    3.0%

The euro climbed to the highest in almost three weeks against the dollar on prospects the European Central Bank will increase interest rates next week to curb inflation while the risk of an immediate Greek default subsides.
“The euro has been squeezed higher, and that was inevitable, because many people were short going into this,” said Neil Mellor, a currency strategist at Bank of New York Mellon Corp..
ECB President Jean-Claude Trichet today repeated that policy makers are in a state of “strong vigilance” ahead of the July 7 meeting, a phrase he has used before tightening monetary policy in the past.
The case for higher rates was strengthened as data showed European consumer-price growth was above the ECB’s 2% target for a seventh month. The inflation rate remained at an initially estimated 2.7% for a second month in June, statistics showed today.
A separate report showed German unemployment declined for a 24th straight month in June.
“The ECB has entered a cycle of raising interest rates,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co.. “I expect the euro to strengthen.”

EUR/USD printed highs around $1.4520/25 before it slowly retreated to $1.4458.

GBP/USD fell from $1.6110 to $1.5970 before it was back to $1.6012.

USD/JPY held within the range, limited by Y80.30/46.

The US calendar starts at 1230GMT, with the weekly Jobless Claims data. Claims are expected to fall 9,000 to 420,000 in the June 25 employment survey week.
Also at 1230GMT, the ISM-NY Business Index data is released.
At 1345GMT the June Chicago Purchasers Index data is released. The Chicago PMI is expected to fall to a reading of 53.0 in June after falling more than 10 points in May.