The Dollar declined against the Euro on speculation that reports today will show Housing Starts fell to a 17-year low and Consumer Confidence slumped to the weakest in 26 years. The Dollar traded at 1.5496 against the Euro at 6:00am GMT. The Euro was supported by the first-quarter's strong growth in Germany and France, since it highlighted the relative strength of the European economy compared with that of the United States. 'The Euro's gain was probably temporary as it will be difficult to rise further given other weak economic indicators recently', said Masafumi Yamamoto, head of foreign exchange strategy at Royal Bank of Scotland. US interest rates futures continue to signal the expectation that the Fed will raise the benchmark rate by 0.25 percentage points by the end of the year to 2.25 percent.

Against the Yen, the Dollar stopped its growth, as weak economic data raised concerns about US growth prospects. The Dollar was little changed from the late US trade against the Yen and in the early trade, at 6:00am GMT, traded at 104.54. The Yen was supported by the data revealed yesterday that showed Japan's economy grew 0.8 percent in the first trimester of the year, above market expectations for a 0.6 percent increase, for an annualised rise of 3.3 percent. The Euro traded at 161.98 against the yen at 6:00am GMT, from 161.79 yesterday and 159.21 a week before. Tokyo's Nikkei average was down 0.2 percent, erasing some initial gains; gains in the stock market are usually seen as a signal for a stronger risk appetite among investors, spurring trades in which low-yielding currencies, such as the Yen, are used to buy higher-yielding currencies and assets.

The Pound rose to day's highs against the Dollar in the early trading, with traders citing technical levels around $1.95 being taken out. The British currency traded at 1.9476 against the Dollar at 6:00am GMT. The Dollar had been supported, through the past days, by steady gains in US stocks, rising US bond yields and a growing view that the worst of the credit crisis may be over, with the Dollar index against a basket of six major currencies hitting a two-month high last week. But yesterday data showed factory activity in the US mid-Atlantic region shrank for a six straight month in May, while manufacturing in New York also declined.

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