FX round-up: Slow news day pushes dollar index higher, euro moves fail to excite

News of any major impact was a bit thin on the ground on Monday, leading to subdued moves on the FX market.

The dollar index traded slightly higher on the day, but this failed to translate to a stronger dollar against sterling.

Possible reasons could be controversy and speculation in the US regarding Donald Trump's son in law, Jared Kushner, and his dealings with Russia during Trump's campaign, damaging the political perception of the US and the current administration. Ahead of a meeting with Senate and House Intelligence Committees, Kushner released a statement denying any collusion with Russians.

"A weaker dollar seems to be the path of least resistance given the soft data coming out of the U.S. and the political uncertainty," said Michael Hewson, chief markets strategist at CMC Markets in London. Softening US Treasury yields and weak data could also be weighing on the greenback.

The pair started the day off at 1.3015 managing to rally to 1.3035 by midday and at 1.3027 by 1700 BST. News out showed US existing home sales falling to 5.52m, missing consensus forecasts of 5.59m. In addition, traders were reacting to news that International Monetary Fund has cut its UK gross domestic product growth estimate from 2% to 1.7%.

No doubt all eyes will be turning to the Federal Open Market Committee (FOMC) statement due on Wednesday for further clues on possible rate hikes by the end of the year, especially as soft US data recently has led many to doubt that any hikes are likely.

The euro saw a flurry of announcements for France and Germany, both releasing flash manufacturing and services PMI figures, but failing to ignite any excitement with EUR/USD trading sideways for the day in a tight 1.1637/1.1660 range since 0800 BST, trading at 1.1638 by 1700 BST.

The rest of this week sees little news from the eurozone being released, pushing technical levels and sensitive US data to the fore for direction.

The dollar managed to gain some ground against the yen on Monday, halting a strong move lower from July's high of 114.49. Shorts seemed to have taken profits as the pair traded hit a low of 110.62 by 1000 BST, before managing to recover to 111.24 by 1700 BST.

This comes as Japan's Prime Minister Shinzo Abe attended a hearing in the lower house of parliament, denying all allegations of favouritism regarding the sale of land to the Moritomo Gakuen group, for construction of their proposed school, which was sold for just one-seventh of the appraised value. Abe is due to face the upper house on Tuesday where he is expected to deliver the same defence.