The dollar continues to drop despite last positive indicators over the US economy.

Friday data of independent research organization Conference Board showed growth of activity of the US economy in May and data of Philadelphia Federal Bank demonstrated increase of activity in the industry of Philadelphia FED district.

Conference Board Index - Leading Indicators, calculated on 10 important indicators, shows the general tendencies of a business cycle.

It comes out from analysis of set of the basic economic monthly parameters with various weight factors - such as the unemployment, new factory orders, cost and yield of Treasury notes, consumers’ confidence and so on.

In spite of the fact that the index is lagging however it gives the fullest and objective picture of a current condition of economy, it also enables long-term forecasting the further development of economy.

The generalized index demonstrated in May growth up to 0,3 points in comparison with April indictors which showed negative value -0,1 point.

Dollar bulls close long positions expecting FOMC decisions concerning federal funds rate, the decision on which should be made this week. FOMC meeting also becomes the basic event of this week.

Inflation remains the main stimulus for FRS, especially on a background of a rise in oil prices. We remind that oil futures within current month rose up to record levels to 70 dollars a barrel. Some analysts even consider that Governing Council under the head of Ben Bernanke can increase the rate on a background of such hike in energy prices.

However as a whole the market does not expect any surprises from FRS decision, the majority of analysts consider that the Federal Reserve will adhere to a neutral position and will neither raise rates nor to reduce them, and once again will set them at a level of 5,25 %.

Today the European currencies were supported after the next economic release over Germany, the Index of consumers sentiment in Germany in July was up to 8,4 points, GfK research company informed. Economists forecast 8,0 points. June value of the index was revised up to 7,4 points from 7,3 points. In June, 2006 the index made 7,1 points. At the same time the index of economic expectations of consumers GfK in June decreased to 69,0 after record growth to 69,5 points in May and against 20,4 points in June, 2006.

As a whole in spite of the fact that the dollar has lost partially its positions market moods remain neutral.