The speculation that Fed will stop cutting interest rates on increasing concern about the inflation outlook is boosting the US currency; . The Dollar rose as durable-goods orders excluding transportation equipment increased more than forecast last month, revealing that US economy is starting to resist a housing market slump. The Information and Forschung (Ifo) Business Climate Index revealed yesterday, based on a survey of 7,000 executives, that German business situation fell to 102.4 this month, against the 104.8 in March, pushing the Euro down against the Dollar.

'We have started to see a bit less panic in the U.S. and that also translates to expectations that the Fed rate cuts might be coming close to an end', said Naomi Fink, a strategist in Tokyo at Bank of Tokyo Mitsubishi UFJ Ltd. The Dollar reached a second winning week against the Yen and is expected to continue to strength as investors speculate that Fed will stop cut interest rates; the US currency traded at 104.38 against the Yen at 8:00am GMT. BNP Paribas analysts believe that investors should buy dollars with a target of 105 yen and a sell order at 103.20 yen to limit losses.

Japanese Consumer Price Index (CPI) was revealed yesterday, showing a rose of 1.2 percent in March, the most in a decade. After the release of this indicator of the inflation trend, speculation that the Bank of Japan will increase interest rates, leaded Yen to an expected slump, the biggest in almost nine years. Against the Euro, the Japanese currency traded at 163.47 at 7:00am GMT. Rising stock market is pushing investors' confidence up, leading to a decrease of the Japanese currency against the South African Rand. Carrying trades, investors get funds in a country with low borrowing costs and invest in one with higher rates, earning the spread between both.

The UK will reveal today its GDP, which is expected to slow down a bit, having a negative impact in the nation's currency. GDP is the major measure of economical activity and health; more important, the central bank is more likely to raise interest rates if the country faces a strong and growing economy, which has a major impact in the value of the Pound. Also, later today will be revealed American consumer sentiment; higher sentiment levels are a leading indicator of rising consumer spending, which has a positive impact in the US economy and, consequently, in its currency. The indicator is forecasted to rise by 0.1 percentage point.

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