The weekend has been quiet with the Memorial Day holiday in the US, but we could see some volatility today with the data that is due in.  The expectation is that the data is going to confirm the seriousness of US economic conditions with no expectations of a bright number here or there to put a light at the end of the tunnel.

The volatility is already apparent in Eerly morning trading which has seen the dollar strengthen against the franc and the euro after hitting lows of 1.0226 and 1.5819 at 2:00 am then jumping to 4-day highs of 1.0290 against the franc and 1.5738 per euro in about an hour. The dollar is now trading at 1.5753 against the euro and 1.0275 against the franc, compared to yesterday's close of 1.5772 and 1.0248, respectively.

Factors affecting these poor expectations have been the rocketing food and energy prices.  Oil has continued to climb rising by more than $1 a barrel in early European trade. Investors are increasingly concerned that soaring energy costs will weigh on economic growth,

The collapse of the US housing sector is serious.  Discussions in the Japanese parliament earlier today revealed concern over the U.S. economy due to unstable housing and financial markets.

"The biggest uncertainty is whether the housing market will show signs of a recovery," Shirakawa told a financial committee in the upper house of parliament. In addition

tightening credit conditions have sparked widespread pessimism throughout the financial markets.

Labour markets are following suit and have started to deteriorate shown by the slow gains in the unemployment rate in recent months, and things are only expected to get worse.

A local perspective comes from a consumer blog where Patrick Killelea reports that “Salaries cannot cover current house prices. This means house prices must keep falling or salaries must rise much faster. You probably noticed that your salary is not rising much, and that inflation in food, energy, and medical care has been much higher than the government reports. This leaves less money available to pay for housing. A safe mortgage is a maximum of 3 times the buyer's yearly income, but most mortgages are well beyond that. Anyone who buys now will suffer losses immediately, and for the next several years at least, as prices keep falling.”

Purchases of new homes probably dropped 1.1 percent in April to an annual pace of 520,000, the fewest since September 1991, according to the median forecast in a Bloomberg News survey. A separate report may show a measure of consumer confidence fell this month to the lowest since 1993. The figures are due at 10 a.m. in Washington.

``The housing crisis still weighs on the market,'' Joerg de Vries-Hippen, who oversees about $26 billion as chief investment officer for European stocks at Allianz Global Investors in Frankfurt, said in a Bloomberg Television interview. ``After the long weekend, investors come back and adjust their portfolios.''