After a small pause on Friday today dollar has continued strengthening.

The market expects essential decrease in total amount of the US trade deficit as supports the dollar. The basic news now is trading negotiations between China and the USA which began in Washington on Wednesday, on May, 16th.

Cheap, at a level of a damping, export from China every year becomes more and more serious problem for the American and European manufacturers. The significant share more than 30% of the US trade deficit belongs to deficit of export-import balance between the USA and China, last year it reached 232,5 billion dollars. That was an occasion for serious concern for both Democrats and Republicans.

The spectrum of questions which is touched at a meeting is rather wide, however the most important theme of discussion became a rate of national currency of China – yuan, which, in opinion of the USA is restrained at a low level artificially, as is the main basis of the low cost price of the Chinese goods in comparison with the goods of the American manufacturers.

Irreconcilability of the Chinese party in this question can worsen political relations between two countries and lead to real trading war.

On Friday, wishing to show readiness for more flexible line of policy, China announced about changes in system of formation of exchange rates of yuan, which can accelerate process of yuan strengthening. The Chinese Central Bank declared about expansion of a daily trading corridor of change of a currency exchange up to 0,5 %, earlier it was - 0,3 %. Thus, yuan strengthening can be at faster rates almost twice.

However it is not clear yet whether it will be convenient for the American party. By estimations of Americans the Chinese yuan is underestimated by 40% that makes export from China cheaper, creating unfair advantage in prices, thus stimulating the US trade deficit.

The chief negotiator of the USA, Minister of Finance Henry Paulson considers that a reference point for the beginning of negotiations is a rate of yuan, and then there are other problems of trade with China: it is problem of wider home market, a problem of a counterfeiting of well-known brands and piracies and so on.

Economists expect that as a result of a meeting the yuan will rise in price by the end of year by 4-7 % that will lower the US trade deficit.

However this week euro position can already be restored, tomorrow the report of German research institute ZEW is planned. Economists expect a positive estimation of EU and German economy on all ZEW indicators.

Besides in May bulletin of Bundesbank it was noted that current macroeconomic indicators demand "special vigilance".

According to forecasts the European central bank will raise the interest rate up to 4,0 % from a current level of 3,75 %.

Forecasts for the inflation, based on data on monetary and credit sphere, point out "the increased inflationary risks" within two years and more, Bundesbank informs.

In 2007 economic rise in the Eurozone will proceed. The majority of macroeconomic indicators were above forecasts, and leading indicators of moods specify the confident economic growth.

As a whole position of balance in moods of the market concerning dollar and the European currencies are kept. While we remain outside the market.