USD

Pending home sales index, a gauge looking two months ahead, has jumped 6.3% from last month and is at it’s highest level in six months.  There have been massive price declines in some areas and bargain hunters are beginning to pick up some of the fallout.  Despite the rise, the index is down 13.1% from last year.  However the forecast of existing home sales is that it will slow to $5.4million before rising in 2009.  Last year the average was $5.65million.

Higher home affordability should help to clear the inventory of unsold homes which is at a high of 11.2 months supply, but countering the lower home prices are the weakening employment figures and higher inflation created primarily by the increased oil price.

Bernanke"s speech at 00:15 GMT resulted in the USD rising.  He emphasized inflation concerns and played down growth worries and helped send 2-year Treasury yields above 2.95%.

Events scheduled for today:

       07:30  NFIB Index 

       07:45  ICSC Weekly Chain Store Sales for Jun 07 week 

       08:00  FRB Boston's Rosengren (non-voter) on inflation in Chatham; MA 

       08:00  FRB Dallas' Fisher (vtr) on globalization and Monetary Policy; NY 

       08:55  Redbook Retail Sales index for Jun 07 week 

       10:00  FRB Philadelphia's semi-annual Livingston Survey 

       10:00  Apr Job Openings and Labor Turnover Survey (JOLTS) 

       11:30  Treasury auctions $22 bln 5-day CMBs; settle Jun 11 

       13:00  Treasury auctions 4-week bills; settle Jun 12 

       18:00  Bernanke on inflation & monetary policy at Boston's research conf  

EUR

Swedish figures have shown high inflation and low growth which seem to be the current pattern out of the Euro zone at present.  High Fuel costs were quoted as the major cause for the inflation increases.

 On Jun 6 The ECB decided to keep rates on hold at 4.00% again but at the press conference Trichet hinted that there were some in the governing council who were considering a rate hike, perhaps even by “a small amount" in July to counter rising inflation pressures. There is a little scepticism that the data coming out of the EU will support such a decision.

No Major events are on the cards today.

The following data is due for release:

EUR/USD

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If today’s data holds up the hawkish comments on interest will help the Euro rally.