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With many still on summer vacation and London markets closed for a bank holiday, it is not surprising the week is off to a quiet start. This, coupled with the light news stream has kept the major currencies in narrow trading ranges.

The euro and sterling have been confined to about 30 ticks. In very thin, pre-Tokyo activity, the dollar was marked down to almost JPY98.15 (after finishing last week just above JPY98.70), but clawed back to little changed levels. For its part, the Australian dollar was initially bid marginally through the pre-weekend high, but it quickly reversed to remain well within last Friday's ranges.

The MSCI Emerging Market equity index is up about 0.3% to trade at a four day high. However, the currencies are more mixed. Indonesia rupiah, which lost 3.7% last week, initially extended its losses as the package of measures, announced before the weekend and which includes new assistance for exporters, disappointed those that had hoped for more immediate support. Talk of intervention helped it in late turnover ahead of tomorrow's scheduled bond auctions.

The Indian rupee is the weakest of the emerging market currencies today. Although it remains within last Friday's trading range, it is off almost 1.7%. Finance Minister Chidambaram dampened speculation of a near-term rate hike.

Aside from a soft Mexican peso in thin dealing and a Turkish lira that remains heavy (with the dollar bumping against the TRY2.00 level as it has done for the past couple of sessions) and a slightly firmer Korean won, most of the emerging market currencies are little changed.

Note that the Israeli central bank is expected to leave rates on hold at the conclusion of its meeting later today. Mexico will likely report a trade deficit in July after reporting its first surplus in June since March. Brazil's weekly trade balance will be reported later today, but is unlikely to have much impact as the market is focused on the likely 50 bp hike in the selic rate later this week.

What is likely to be a quiet North American session features the July durable goods orders report. It will likely unwind the 4.2% rise in June, though some of the details, such as shipments, excluding defense and aircraft, may be somewhat better. Separately, the Dallas Fed manufacturing report will be released. Given the speculation of Fed tapering, the markets, as we saw before the weekend with the disappointing new home sales, may be more sensitive to disappointing U.S. data than positive news.

Source: Subdued Session, Markets Lack Clear Focus