With the dollar unable to break resistance levels, consolidation is liable to be a dominant theme ahead of Tuesday's Federal… … Reserve interest rate decision, but with a slightly firmer bias.

The US currency was close to
1.3875 in Europe on Monday with further selling pressure close to
1.3850.

The headline US retail sales data
was close to expectations with a 0.3% increase as auto sales rose strongly. The
underlying figure was weaker than expected with a 0.4% monthly decline which
will maintain fears over a slowdown in spending, although July's data was
revised higher. There was a surprising 2.4% decline in gasoline sales while
building material sales also fell.

The 0.2% increase in industrial
production after a 0.5% increase previously continues to suggest modest
manufacturing growth, while consumer confidence edged slightly higher. Former
Fed Chairman Greenspan's warnings over the housing sector will help keep fears
over US growth trends in focus and ensure weak underlying dollar sentiment
continues. Speculation over a 0.50% Fed rate cut is liable to edge slightly
lower.

www.investica.co.uk