Asian session: The euro fell against most of its major peers

03:00 New Zealand Expected Annual Inflation 2y from now Quarter II +2.5% +2.4%

The euro fell against most of its major peers before data that may show consumer sentiment slid to a four-month low amid Europe’s debt woes. A gauge of household sentiment in the euro area probably dropped to minus 20.5 this month from minus 19.9 in April, according to the median economist estimate in a Bloomberg News survey before the European Commission reports the figure today. That would be the lowest level since January.

The 17-nation currency snapped a two-day advance against the dollar as European Union leaders prepare for a summit to discuss the fiscal crisis. German Chancellor Angela Merkel said yesterday she won’t shy away from disagreeing with French President Francois Hollande at the EU summit beginning tomorrow in Brussels. Good cooperation “doesn’t exclude differing positions,” Merkel said in Chicago during a meeting of the North Atlantic Treaty Organization. Elsewhere in Europe, Greece is preparing for June 17 elections following an inconclusive May 6 ballot.

The yen remained weaker as the Bank of Japan starts a two-day meeting today amid speculation it will boost stimulus measures. Japanese Finance Minister Jun Azumi said in Tokyo today he regards highly the steps taken by the central bank since February. The BOJ expanded its asset-purchase program in February and April. Japan probably had a trade shortfall of 470.8 billion yen ($5.9 billion) last month after a revised deficit of 84.5 billion yen in March, according to the median estimate in a Bloomberg survey before the data tomorrow.

EUR/USD: during the Asian session the pair fell, receded from yesterday's low.

GBP/USD: during the Asian session the pair traded in a range $1.5805-$1.5830.

USD/JPY: during the Asian session the pair traded in range Y79.30-Y79.45.

UK data includes inflation data and also the Public Sector Finances at 0830GMT.  If it comes in above 3.0% King's letter will be out at 0930 GMT, but it is only likely to echo the analysis in the May Inflation Report, that while high inflation will persist near term it is still expected to fall back below target further out.  At 1000GMT, the German government gives a briefing on the upcoming EU summit, taking place in Berlin, while at 1040GMT, ECB Vice President Vitor Constancio and Atlanta Fed President Dennis Lockhart take part in a panel debate, in Hong Kong. EMU data in the European afternoon session sees the 1400GMT release of flash consumer morale data. US data starts at 1400GMT with NAR existing home sales data, the Richmond Fed Manufacturing Index and also BLS Mass Layoffs data.