Currencies will bounce around a lot this week with central banks meeting in Australia, New Zealand, Europe and Britain to look at the health of their economies and the immediate direction of interest rates.
The meetings kick off with the Reserve Bank here meeting tomorrow and revealing its decision Wednesday, while the three other central banks meet later in the week.
Economists say that the only oneexpected to produce an interest rate rise is the European Central Bank on Wednesday.
The Bank of England and the Reserve Band of NZ are not expected to move rates at their meetings, but will probably issue strongly-worded statements about tackling and controlling inflation.
They will meet against the backdrop of rising rates in China and a recognition in the US that rates will not be cut this year.
In fact there's increased betting the next movement in the US will be up. Not immediately, but analysts say the gathering recovery in the US is pointing towards an increase.
But inflation isn't the problem it seemed at the beginning of 2007 and even though the first half slow down was worse than thought, there's more than enough evidence around of a solid recovery, except in housing.
US bond yields rose sharply on Friday after the better-than expected May employment figures showed 157,000 jobs were created in the month.
Rates rose to around 4.95 per cent to 4.96 per cent for 10 year bonds and the US dollar hit a four month high against the yen.
The economic data from the US seemed to support The Federal Reserve's contention last week in the minutes released of its May 9 meeting, that it still expects a pickup in the economy this year, with inflation remaining its main concern.
The US dollar climb ended at 122.07 yen after reaching 122.14, the highest since late January, while the Australian dollar rebounded above the 83 USc level to close around 83.30 USc.
The Aussie actually hit a 15 year high against the weakening yen on Friday.
The Aussie was around 101 Yen, the highest level since early 1992 and up 13 per cent in the past month.
The Canadian dollar jumped to 94.23 USc and hit 94.33 USc during trading Friday, the highest intraday level since July 1977.
The ECB is expected to raise rates to 4 per cent on Wednesday, while the Bank of England is likely to leave UK rates steady on Thursday at 5.5 per cent.
The Aussie central bank won't move rates this week from 6.25 per cent and the RBNZ is considered highly likely to leave its Official Cash Rate at 7.75 per cent.
US markets shrugged off the higher interest rates last week.
The Dow was up 1.19 per cent, the Standard & Poor's 500 index finished 1.36 per cent higher and NASDAQ climbed 2.22 per cent after Dell Computers surprised with better than expected sales, earnings and 8,000 job cuts.
Friday's rise in jobs came after a revised gain of 80,000 in April while the Institute for Supply Management said its index of manufacturing businesses rose to 55 last month from 54.7 in April (a reading above 50 indicates expansion).
Economists believe that US factor orders in April will show another rise this week, but not as much as March's surprise 3.5 per cent advance.
China's share market instability resurfaced Friday with a 3.2 per cent fall in the main CSI 300 index after the earlier 6.8 per cent fall Wednesday.
The leaders of the Group of 8 countries including the US, Japan, Germany and the UK will meet June 6-8 for their annual summit in Germany.
