Sales of new housing starts in the U.S. probably fell in May to the second-lowest level in almost 17 years, signaling the housing slump will keep weighing on the economy, economists said before a report today. New home sales figures will be out today the forecast is around 515K from 526K last month. Falling property values, rising mortgage rates and stricter borrowing rules may keep potential buyers out of the market for much of 2008/2009.

The dollar was little changed against the euro and yen before the Federal Reserve ends a two-day meeting at which policy makers are forecast to end a run of seven interest-rate cuts. The dollar is currently trading at $1.5548 per euro as of7:36 am, GMT from $1.5568 in New York yesterday. The dollar is currently trading at 108.00 yen as of 7:38 am, GMT from 107.82. Japan's currency is at 168.00 a euro from 167.85 yesterday. The U.S. currency may fall to $1.58 a euro in the month of July, The U.S. currency also traded near a two-week low versus the Australian dollar as traders reduced bets that the central bank will increase rates from 2 percent this year on signs the economy is still slowing.

The euro may rise to a record 169 Japanese yen should it stay above its five-day moving average, said Masashi Hashimoto, a senior currency analyst at Bank of Tokyo-Mitsubishi UFJ Ltd. The current five-day moving average is 167.59 and represents a level of so-called support, Tokyo-based Hashimoto said, citing technical charts traders use to predict price movements. The euro reached a record high of 168.99 yen on July 23. Support is an area where buy orders may be clustered.

On the other hand any massive gains in the euro may be limited by speculation that European Central Bank officials will tone down their rhetoric suggesting that interest rates will rise. The ECB may raise its benchmark rate by a quarter-point to 4.25 percent in July to curb the fastest inflation in 16 years, Trichet said on June 5. Since Trichet's comments, European manufacturing and services unexpectedly shrank, the ZEW's index of German investor confidence slid to a 15-year low and the Ifo's measure of German business confidence fell to the lowest in more than two years. Germany is Europe's largest economy.

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