A combination of factors have led to US dollar weakness Monday in the currency markets. Crude oil has reached a new record high of $139.89 per barrel during New York trading as oil production from Norway, the fourth-biggest oil exporter in the world, is cut after a fire broke out at StatoilHydro ASA’s (STO) 150,000 barrel-a-day Oseberg oil and gas field. Oil hitting another all-time high has poured water on USD’s bullish momentum as they tend to move in opposite directions.

The dollar was also pressured on the downside following the release of the weaker-than-expected New York Fed Empire State manufacturing survey. The June survey came in at -8.68 against an expected -2 reading, indicating that manufacturing activity in New York state has become much more sluggish, dipping further into the contraction zone.

Earnings results from Lehman Brothers (LEH), the fourth largest US securities firm, also played a part in long dollar profit-taking moves; Lehman reported a first-ever loss of $2.8 billion, or $5.14 per share before the US stock market open today, on par with preliminary figures it released last week.

But it’s not all weak US data today: April’s Treasury International Capital flows [TICs] showed net buying of $$102.8 billion in long-term US securities in April, compared to purchases of $53.3 billion in March. April’s flow was more than enough to cover the $60.90 billion trade deficit for the same month. Dollar recovered slightly after the TICs data but it still remains down against other currencies on the oil rally.

Eurozone Inflation Higher

The Eurozone consumer price index for May came in slightly higher at 3.7% (3.6% expected) - a record high - boosting the Euro. This marks the ninth consecutive month that consumer prices have risen at a rate faster than the ECB’s inflation target of just below 2%. ECB’s Wellink said today that the ECB message for next month was clear enough, but it is premature to speculate in the second half policy outlook.

Forex Trading

EUR/USD rose to an intraday high of 1.5520 but has since eased back there. 1.5560-70 will be next resistance, followed by 1.5590 and 1.5630-50. USD/CHF’s nearest support is around 1.0380 then 1.0360. Consolidative action is likely to dominate ahead of Tuesday’s heavy events calendar.

Economic Calendar For Tuesday:

UK CPI, retail price index 0830 GMT

German ZEW 0900 GMT

Eurozone trade balance 0900 GMT

US producer price index, current account balance, housing starts 1230 GMT

US industrial production 1315 GMT

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