Euro Rebounds, AUD hits 5-week low

Trading was thinned by holidays on Monday but markets found a few reasons push ranges. The euro was the top performer on the day while the Australian dollar lagged on a day when moves were limited to less than 50 pips. Trading may pick up as liquidity returns to markets Tuesday and Japan releases several economic indicators.

The euro climbed steadily higher in early European trading, touching 1.3415 from 1.3360 at the end of last week. The rally continues the rebound after Friday's non-farm payrolls and the ECB rate cut a day earlier.

The euro remains more than a cent below pre-ECB levels and has posted two consecutive inside days on the chart. We cautiously look at the rebound as a standard bounce/consolidation so far. Macro traders will be looking for any strength to sell into.

The Australian dollar was modestly weaker throughout the day and fell as low as 0.9343 from Friday's close at 0.9480. Risk trades were marginally perky with the S&P 500 gaining 1 point and European stocks up 0.3-0.7%.

Coming up later, the focus shifts to Japan starting at 2350 GMT with the September tertiary industry index expected to rise 0.2%. Much later its Oct consumer confidence at 0500 GMT which is forecast to rise to 45.5 and then Oct preliminary machine tool orders report at 0600 GMT.