The euro and commodity−linked currencies rose on Monday

Sales of new homes in the U.S. probably rose in June to the highest level in four months, adding to evidence the housing slump that began in 2005 is stabilizing, economists said ahead of a government report today. Sales increased 2.9 percent to a 352,000 pace, according to the median forecast of 60 economists surveyed by Bloomberg News. Purchases reached a record-low 329,000 pace in January. Falling prices and near record-low mortgage rates have started to lure buyers even as the unemployment rate rises. The worst recession in five decades may end in coming months as the housing and manufacturing downturns ease. Other reports underscore the stabilization in housing. The Wells Fargo/National Association of Homebuilders sentiment index has risen in five of the past six months and existing home sales have increased for three months in a row.

Sterling fell against the dollar and euro on Friday as second-quarter UK growth figures came in weaker than expected, dampening expectations for a quick economic rebound. Gross domestic product (GDP) data showed the UK economy fell by 0.8 percent on the quarter, taking the annual decline to 5.6 percent. That was far worse than forecasts for a decline of 0.3 percent, after a hefty 2.4 percent drop in the first quarter. "These figures are a bolt from the blue," said Philip Shaw, chief economist at Investec. "We thought that GDP had probably shrunk again in the second quarter but not by this extent." The GBP/USD is currently trading at $1.6450 as of 9:24am, London Time.

The euro and commodity-linked currencies rose on Monday, underpinned by gains in stocks and oil prices, but currency moves were modest as the market kept to recent ranges ahead of U.S. GDP data due later in the week. Federal Reserve Chairman Ben Bernanke reaffirmed his view of an improving but still vulnerable U.S. economy, saying the jobless rate was likely to stay high even when the economy exited recession sometime in the next few months. The EUR/USD is currently trading at $1.4240 as of 9:25am, London Time.

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