The Dollar rose in the early trading for a third day against the Yen, after Federal Reserve Chairman Ben Bernanke stated an increase in inflation expectations is something to be worried about. The US currency traded at 105.55 against the Yen at 6:00am GMT. Unexpectedly US services and private-sector jobs data supported the speculation that the Fed can rise borrowing costs later this year, helping the Dollar's bullish trend. 'The Fed is tightening its guard against inflation expectations in order not to fall behind the curve', said Koji Fukaya, a senior currency strategist at the Tokyo unit of Deutsche Bank AG, the world's largest currency trader. 'This is dollar supportive, as long as the economy is doing well.'

The Dollar also appreciated against the Euro, extended gains made yesterday after Ben Bernanke emphasized inflation concerns. The Dollar traded at 1.5403 against the Euro at 6:00am GMT. The Euro fell 0.2 from late US trade and hit a three-week low of $1.5383, well off a record high of $1.6020 in April. However, the Euro fast recovered on speculation that the European Central Bank will keep interest rates on hold at 4 percent at a meeting today. The ECB is still dealing with inflation, being forced to maintain the benchmark rate, even though Euro Zone's economies are showing signs of economic slowdown.

The Pound fell on Thursday morning versus the Dollar and the Euro, after the country's biggest mortgage lender HBOS Plc revealed British house prices fell a larger than expected 2.4 percent on the last month. The British currency traded at 1.9516 against the Dollar and at 0.7908 against the Euro at 7:00am GMT. The data provided further evidence that the housing market is slowing down and policy makers are facing a growing dilemma, trying to balance slowing growth with rising inflation. The Bank of England is expected to maintain interest rates steady at 5 percent later today. However, it can surprise investors, since it has been cutting 25 basis points every quarter, what would support the Pound's slump.

The New Zealand's Dollar dropped sharply after the country's central bank maintained interest rates at 8.25 percent and said it is likely to lower them later this year. The kiwi traded at 0.7659 against the Dollar at 7:00am GMT; the kiwi slumped 2.1 percent, the most since 16th January, from 78.28 cents in Tokyo yesterday. Reserve Bank of New Zealand Governor Alan Bollard said the currency's drop was desirable as it will help to boost exports and that cut interest rates is needed as a ``housing market bubble'' is deflating.

Besides the decision on the interest rates by the ECB and BoE, investors will also pay attention to the release of Building Permits m/m in Canada; which is expected to boost the Canadian Dollar, since it is forecasted an increase. A rising trend has a positive effect on the nation's currency because obtaining a permit is one of the first steps in the home construction process. Unemployment claims will be revealed in the US, which are predicted to rise, having a negative impact on the currency.

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