LONDON (AFX) - The euro was little changed from afternoon Tokyo levels in early trading with the market in a consolidation mood ahead of the European Central Banks's rate decision on Thursday and the US independence holiday on Wednesday, dealers said.
"The market is winding down ahead of the Independence Day holiday but will still be interested in what (ECB president Wim) Duisenberg has to say this afternoon when he presents the annual ECB report," said Jeremy Hawkins, chief economist Europe at Bank of America.
Michael Klawitter, a currency strategist at West LB, said that today's economic data in the US and in the euro zone should have little market impact.
"Following the stronger than expected NAPM index, investors will stick to the US recovery scenario whereas in the euro zone, the June PMI data once again highlighted the downside risk in growth, putting the focus firmly on the ECB."
"While we expect a ECB rate cut on July 21, any hawkish statements at the ECB press conference on Thursday would put pressure on the euro, given that the limited reaction on the bad EU-12 PMI data largely reflected the market expectation that the ECB will finally cut rates to support economic growth," he added.
Some of the euro zone data due out today are May unemployment and June business and consumer confidence.
Sterling gave up yesterday's gains and was trading lower against the major currencies on profit-taking, dealers said.
"It had a good run yesterday and people are looking for the rest of the week to be quiet," Hawkins at Bank of America said.
"The (Nationwide) house price index was very strong and a Pricewaterhouse Coopers report suggested that the assessment of the EMU criteria will be delayed so the trend for the pound is still strong," he added.
This morning the UK's biggest building society, the Nationwide, said UK June house prices rose a seasonally adjusted 1.9 pct from May, leaving them 9.3 pct up on the same month a year earlier.