The US Dollar continued to struggle yesterday hitting its weakest level against the Euro since May. At the same, the reserve currency failed to react to the shift in market sentiment as equities markets moved lower. Economic data from the US was light with the initial jobless claims hitting expectations. Meanwhile St. Louis Fed President James Bullard held a dovish outlook for inflation and said the U.S. faces a similar scenario to Japan as price growth falters, and argued that the FOMC should “expand the quantitative program through the purchase of Treasury securities” in an effort to mitigate the risks for deflation. Released today is the Q2 GDP figures. Markets are expecting a slowdown in US growth as the world’s largest economy is projected to expand at a pace of 2.5% in the second-quarter. The slower pace of growth could weigh on market sentiment as policy makers anticipate to see a moderate recovery going forward. Also released is the final reading for the U. of Michigan confidence survey is expected to come in at 67.0 for July from an initial forecast of 66.5.

Economic data from the region continues to improve pushing the currency higher. The Euro rallied to its highest level since 10/05/10 as economic confidence exceeded economists’ forecasts. At the same time, consumer and business confidence pushed higher during the month. In addition to this Germany’s unemployment rate fell to its lowest level since November 2008 as widely expected. Released today is the region key inflation data which is expected to edge higher while the unemployment rate is expected to remain at 10 percent.

The British Pound continued to edge higher against the Greenback for fifth consecutive day. However, the economic docket showed a weakened outlook for the UK economy as mortgage approvals grew less-than-expected in June, with banks granting 47.6K loans amid forecasts for a 48.8K clip, while net consumer credit unexpectedly slipped £0.1B during the same period after expanding £0.3B in May. In addition, the Nationwide home price index weakened 0.5% in July, which was worse than expected. Overnight the GFK consumer confidence was slightly below expectations and remains negative. Economic data is quiet today.