Further evidence of stability in the housing market and solid retail activity could prompt a rethink of MPC easing risk now priced in, allowing the euro to retreat sharply against the pound.

The FX market is watching interest rate markets and short- end yields have come off and that's because core CPI was tame. For the dollar to continue to do well, you need interest rate expectations to continue to move in its favor, and with a fair amount of tightening already priced in, that's getting harder and harder.

The better tone in global equity markets as crude prices moderate a bit has helped ease risk aversion concerns, to the dollar's benefit.

This should induce some slowing in housing market activity, but we expect the housing market in 2006 to be strong, nonetheless.

It shows there is still solid underlying demand for housing and that activity this year, while slowing, is not going to collapse.

Evidence of ethnic cleansing and further atrocity is apparent through the area of Serb activity.