The Dollar weakened against the Yen on the early trade, as a fall in Tokyo's stock market diminished the appetite for risk and for carry trades, which involves selling low-yielding currencies such as the Yen and buy higher-yielding currencies and assets. The US Dollar traded at 107.86 against the Yen at 7:00am GMT. The Dollar is depreciating thanks to the release of weak US economic indicators this past week, including data that showed housing starts slumped to a 17-year low.

The Dollar also declined against the Euro, on speculation the Federal Reserve will keep interest rates on hold next week, in order to boost economic development, after it had stated it should increase borrowing costs due to high inflation. The US currency traded at 1.5528 against the Euro at 7:00am GMT. The Euro was also supported by the release of the German PPI m/m at 7:00am GMT, which was released better than expected at 1%.

The Euro rise against the Yen, on speculation European Central Bank President Jean-Claude Trichet will signal on its speech later today that it can raise interest rates next month. The Euro traded at 167.50 against the Yen at 7:00am GMT. Luxembourg Prime Minister Jean-Claude Juncker stated yesterday, before a European Unit summit, price pressures in the region are too high. 'Monetary policy expectations will prevent any rapid declines in the euro versus the dollar and the yen', said Masafumi Yamamoto, head of foreign exchange strategy for Japan at Royal Bank of Scotland in Tokyo and a former Bank of Japan currency trader. 'A July rate hike is a done deal.'

The Australian Dollar and the New Zealand Dollar appreciated against the US Dollar on speculation both countries will maintain their rate advantage against the US. The Aussie rose 1.4 percent this week against the American Dollar and it traded at $0.9520 at 8:00am GMT. The kiwi jumped 1.6 percent against the US currency and it traded at $0.7619 at 8:00am GMT.

Today investors will be paying attention to the release of Core Retail Sales m/m in Canada, which are expected to rise 0.5 percentage points, boosting the nation's currency since it shows a positive trend in the economy. In the Euro Zone, ECB President Trichet will make a speech later today where he is expected to signal a raise in borrowing costs next month.

Economic Calendar