(14-12-2007 7:30 GMT) The dollar is back and seems eager to make up to the massive losses in the past period; though its gains are still slight yet we can say the energy is thumping.

Since yesterday the dollar gained ground as inflation in the US is clearly not on the rise as much as on the double. Producers prices yesterday exceeded expectations coming in twice more, while today the journey continues as inflation on the consumer side is we are about to see. Inflation will make it very hard for the Feds to cut interest rates soon and for that the Term Auction Facility was a brilliant idea.

The dollar strength yesterday drove the euro to breach 1.4600 which is a strong level which held the euro above and now trading in a tight range in that area. Inflation is thee issue for the hawkish ECB today data showed German inflation at a 12 year high and later we are to hear the word for the entire euro area. The pair is heading to the downside at this hour and trading close to the lowest recorded at 1.4610 while the highest wasn't that major at 1.4655.

The royal currency supposedly will enjoy clear skies today, but again nowadays that seems a joy we lack. After weak economic data yesterday from the manufacturing and the housing sector expectations for the upcoming cut continue to mount ahead of key data next week which will reflect the extent of price stability in the area. The royal currency is now experiencing more volatility highlighting rate differentials as we once more might see fundamentals work their way back to the market. The pound is still tied to a close range this morning trading sideways until the pair inclined to set the high at 2.0446 the traded down to set the other end of the range at 2.0375.

The Japanese yen remains a very vulnerable currency, whether it was from rumors surround Japan that its economy might be heading into a mild recession, or whether investors' risk appetite crept on it once again. A weak Tankan survey enforced the expectations and aroused fears that the manufacturing sector is slowing taking the pair to the upside recording a high at 112.64.