Asian session: The euro traded 0.7 percent from its lowest level in two years

The euro traded 0.7 percent from its lowest level in two years before reports this week that may show stagnating inflation and weakening confidence in the currency bloc as the deepening sovereign crisis curbs growth. Figures from the European Union’s statistics office today may show the annual rate of inflation in the euro area remained at 2.4 percent in June, according to the median forecast in a Bloomberg News survey. That would be unchanged from an initial estimate on June 29 and the reading for May.

The 17-nation currency weakened versus most of its major peers after German Chancellor Angela Merkel said she hasn’t softened her stance on measures to stem debt contagion that’s prompted five euro states to seek international aid. Merkel said yesterday in an interview with broadcaster ZDF in Berlin that a banking union involving a financial overseer for the euro area will have to include joint oversight on a “new level.” German lawmakers are scheduled to debate aid to recapitalize Spanish banks this week.

Demand for the Australian and New Zealand dollars was supported as Asian shares rose and on prospects central banks will add to measures to prop up growth.

EUR / USD: during the Asian session the pair fell, retreating from Friday's high.

GBP / USD: during the Asian session the pair fell, retreating from Friday's high.

USD / JPY: during the Asian session the pair fell to Friday's low.

European data for Monday starts at 0700GMT with services sector sales/employment and industrial orders data from Spain. Later on, at 0900GMT, EMU data includes the flash HICP for June and trade data for May, while also in Europe Monday, the Bank of Portugal is due to publish the Official Bulletin. US data starts at 1230GMT with retail sales and the NY Fed Empire State Survey.