Previous session overview

The euro steadied against the dollar in European hours Monday, holding above USD1.45 as some of the fresh Greek angst generated by Standard & Poor's Corp. faded and traders looked ahead to a possible euro-zone interest rate rise.

Separately, the euro is also being propped up by expectations that the European Central Bank will lift interest rates Thursday. ECB chief Jean-Claude Trichet has flagged a rate increase by using the code words "strong vigilance" several times ahead of the rate decision.

Over in the UK, the pound reacted little to news that activity in the U.K. construction sector grew at a slower pace in June. The U.K. construction purchasing managers' index fell to 53.6 from 54.0, survey compiler Markit Economics said.

The euro was at USD1.4524 from USD1.4531 late Friday in New York. The dollar was at JPY80.61 from JPY80.80, while the euro was at JPY117.10 from JPY117.47. The U.K. pound was at USD1.6094 from USD1.6085. The dollar was at CHF 0.8488 from CHF0.8407.

The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 74.268 from 74.282.

The Canadian dollar was slightly weaker early Monday as Standard & Poor's Corp. warned it would treat rollover of Greek debt as a default negated positive news of euro-zone ministers approving a slice of the bailout payment, to stave off a sovereign default. The U.S. dollar was at CAD0.9597 early Monday from CAD0.9586 late Thursday. Canadian markets were closed Friday for the Canada Day holiday.

Market expectation

The Canadian dollar is likely to trade in a tight range on thin volume, with the U.S. markets closed for a public holiday.

USDCHF recovery is likely corrective say dealers and should fail ahead of CHF0.8555 resistance, and then fall back toward June's all-time CHF0.8275 low. Now at CHF0.8494 the bank pegs support at CHF0.8395 and CHF0.8370.

GBPUSD takes a late session hit printing the day's low of USD1.6066 with price action suggesting stops went off on the break of USD1.6090. Now GBPUSD is little higher at USD1.6078, next support comes at USD1.6054 and then the recent lows around USD1.5970.

Looking ahead, this week promises to be key for assessing the general health of the global economy, especially in the U.S. where the Institute for Supply Management's June index for the non-manufacturing sector is due Wednesday and non-farm payrolls are due Friday. Both will be scrutinized for signs that the U.S. economy is picking up again after a soft patch.