The yen weakened against the U.S. dollar against the two-day meeting starting today, the Federal Reserve, which may give markets further information about when the U.S. central bank will reduce the bond-buying program. It is expected that the central bank may announce the collapse of quantitative easing. May 22, Fed Chairman Ben Bernanke said he was willing to reduce the current incentive program, if employment rates in the country will begin to show sustained improvement. Additional pressure on the yen has had a release of weak data on industrial output in Japan. April data showed an increase of 0.9%, while analysts had expected a rise to 1.7%.

It is worth noting that Japan's currency has lost some of its gains this month after the central bank released data on the current account of balance of payments, which rose to a new high against the backdrop of unprecedented monetary stimulus.

The euro exchange rate reached a four-month high against the dollar, after data from the Center for European Economic Research (ZEW), showed that the indicator of investor confidence in Germany rose in June, more than expected, after it remained at the same level in the previous month.

According to the report, the index of economic expectations in Germany in June rose 38.5 versus 36.4 in May. Economists had expected the index to rise to 38.2. At the same time, the index of current conditions in Germany June 8.6 vs 8.9 in May. The market had expected the index to rise to 9.5.

ZEW President Clemens Fuest said that "financial experts stick to their estimates: the German economy is likely to gain momentum in the second half of 2013." "However, the results of this survey show that the economy will improve slowly."

In addition, the report showed that euro zone economic sentiment index rose three points to 30.6 in June. The current conditions index for the currency bloc, however, lost 2.7 points to -79.5.

The pound rebounded from lows against the dollar, but still traded lower. It is worth noting that such dynamics triggered data on inflation and producer prices.

As it became known, the rate of inflation (CPI) rose to 2.7 percent in May from 2.4 percent in April. Economists had expected the CPI to rise to 2.6 percent. On a monthly basis, consumer prices rose by 0.2 percent, the same pace as in the previous month. Economists expected the index to rise by 0.1 percent. The retail price index (RPI) rose by 3.1 percent year on year, as expected. Separately Bureau of Statistics reported that the Producer Price Index (Output PPI) year on year in May rose by 1.2 percent in May, compared with 0.9 percent in April. This, however, was lower than the 1.4 percent that economists expected. On a monthly index measuring sales prices remained unchanged in line with expectations. The base index of producer prices, which exclude volatile prices for food, beverages, tobacco and petroleum products rose 0.8 percent year on year, compared with the expected 0.9 percent growth. In the year to May, the production costs faced by producers (Input PPI), rose 2.2 percent after a 0.1 percent drop in April. Expected to increase to 2.5 percent. On a monthly basis, the Producer Price Index fell 0.3 percent, while expectations were at the same level.

EUR/USD $1.3225, $1.3230, $1.3280, $1.3300, $1.3315, $1.3350, $1.3450

USD/JPY Y94.50, Y95.00, Y95.35, Y96.00, Y97.50

AUD/USD $0.9450, $0.9570, $0.9600, $0.9615, $0.9675

USD/CHF Chf0.9200

EUR/CHF Chf1.2310

GBP/USD $1.5700, $1.5730, $1.5735

AUD/JPY Y90.90

USD/CAD C$1.0240

After reporting decreases in consumer prices in each of the two previous months, the Labor Department released a report on Tuesday showing a modest increase in prices in the month of May.

The Labor Department said its consumer price index inched up by 0.1 percent in May after falling by 0.4 percent in April and dipping 0.2 percent in March. Economists had been expecting the index to edge up by 0.2 percent.

The core consumer price index, which excludes food and energy costs, rose by 0.2 percent in May after rising by 0.1 percent in each of the two previous months. The modest increase matched expectations.

New residential construction in the U.S. showed a significant rebound in the month of May, according to a report released by the Commerce Department on Tuesday, although housing starts still came in well below economist estimates.

The report said housing starts climbed 6.8 percent to a seasonally adjusted annual rate of 914,000 in May from the revised April estimate of 856,000. The increase in housing starts came following a 14.8 percent drop in the previous month.

However, economists had been expecting housing starts to surge up to an annual rate of 955,000 compared to the 853,000 originally reported for April.

The Commerce Department also said building permits, an indicator of future housing demand, fell 3.1 percent to an annual rate of 974,000 in May from the revised April rate of 1.005 million. The drop in permits came roughly in line with expectations.

Germany's investor confidence rose more-than-expected in June, after remaining largely unchanged in the previous month, results of a survey by the Mannheim-based Centre for European Economic Research/ZEW showed on Tuesday.

The ZEW Indicator of Economic Sentiment climbed to 38.5 from 36.4 in May. Economists were looking for a score of 38.1. The latest reading is the highest since March.

Meanwhile, the current conditions measure dropped to 8.6 from 8.9. The index was expected to rise to 9.5.

"The financial experts stick to their assessment: the German economy is likely to pick up speed in the second half of 2013," ZEW President Clemens Fuest said.

"However, the results of the current survey indicate that the economy will improve rather slowly."

Nearly half of the survey respondents expect no significant economic impulses in the next six months, Fuest added.

The economic sentiment index for Eurozone climbed three points to 30.6 in June. The current conditions index for the currency bloc, however, shed 2.7 points to reach -79.5.

Consumer price inflation in the UK accelerated more than expected in May, the latest figures from the Office for National Statistics showed Tuesday.

The rate of inflation rose to 2.7 percent in May from 2.4 percent in April. Economists expected the rate to rise to 2.6 percent.

The largest upward contributions to the change in the inflation rate came from transport, notably air transport and motor fuels, as well as clothing, according to the statistical office.

On a monthly basis, CPI rose 0.2 percent, at the same pace as in the previous month. Economists had forecast the index to rise 0.1 percent.

An experimental measure of consumer price inflation including owner occupiers' housing costs, grew 2.5 percent in the year to May, faster than 2.2 percent increase in April. The retail price index rose 3.1 percent year-on-year as expected.

Separately, the statistical office reported that the output price inflation at British manufacturers rose to 1.2 percent in May from 0.9 percent in April. This, however, was below 1.4 percent expected by economists.

Between April and May, factory gate prices remained unchanged, in line with forecasts. The core factory gate prices, that excludes the more volatile food, beverages, tobacco and petroleum products, rose 0.8 percent year-on-year compared with an expected 0.9 percent rise.

In the year to May, input costs faced by manufacturers rose 2.2 percent. This compared with forecast of 2.5 percent increase and follows a 0.1 percent fall in April. On a monthly basis, input prices fell 0.3 percent while expectations were for a flat outcome.

EUR/USD $1.3225, $1.3230, $1.3280, $1.3300, $1.3315, $1.3350, $1.3450

USD/JPY Y95.00, Y95.35, Y96.00, Y97.50, Y98.00

AUD/USD $0.9570, $0.9600, $0.9615, $0.9675

USD/CHF Chf0.9200

EUR/CHF Chf1.2310

GBP/USD $1.5700, $1.5730, $1.5735

AUD/JPY Y90.90

01:30 Australia RBA Meeting's Minutes June

04:30 Japan Industrial Production (MoM) (Finally) April +1.7% +1.7% +0.9%

04:30 Japan Industrial Production (YoY) (Finally) April -2.3% -2.3% -3.4%

The yen declined for a second day against the dollar before the Federal Reserve starts a two-day meeting today amid speculation about when the central bank will slow its quantitative easing program of bond purchases. Fed Chairman Ben S. Bernanke said on May 22 the central bank could reduce its monthly purchases of $45 billion of Treasuries and $40 billion of mortgage-backed securities if the employment outlook shows sustained improvement.

The yen weakened against most of its major peers after a Bank of Japan report showed its current-account balance will rise to a record amid unprecedented monetary stimulus. The central bank estimated today that its current-account balance, a measure of financial firms' deposits at the central bank, will rise to a record 75.5 trillion yen.

Demand for the greenback was supported before U.S. reports today that may show inflation is picking up and the housing market is improving. The U.S. consumer-price index probably rose 0.2 percent in May from a month earlier, economists forecast in a Bloomberg News survey before the release of Labor Department figures today. The gauge dropped 0.4 percent in April, the most since December 2008. A separate report from the Commerce Department is likely to show that housing starts climbed 11.4 percent last month from April to a 950,000 annualized rate.

The euro was near an almost four-month high before German data forecast to show investor confidence advanced. The ZEW Center for European Economic Research in Mannheim is scheduled to release the latest reading of its index of investor and analyst expectations in Germany. The gauge, which aims to predict economic developments six months in advance, probably rose to 38.1 in June, the highest in three months, from 36.4 in May, a Bloomberg poll of economists shows.

EUR / USD: during the Asian session the pair fell fell to $ 1.3345

GBP / USD: during the Asian session the pair fell fell below $ 1.5700

USD / JPY: during the Asian session the pair rose to Y94.95

There are data releases on both sides of the Atlantic Tuesday and ECB President Mario Draghi speaks. However, the main focus for traders is still on the Fed, with the latest policy announcement and press briefing expected on Wednesday. The European calendar gets underway at 0600GFMT, with the release of the May ACEA new car registrations for the euro area. At the same time, ECB President Mario Draghi IS SET to speak at A Bank of Israel Conference in Jerusalem. The main German release comes at 0900GMT, with the release of the June ZEW survey. The market is looking for a Current situation reading of 9.5, up from 8.9 in May. The economic sentiment indicator is seen rising to 38.1. The latest UK inflation data is expected at 0830GMT, with PPI, CPI and RPI all set for release. Data are expected to show that consumer price inflation drifted higher in May after having fallen sharply in April. Lower petrol prices helped bring down the CPI rate in April but they moved higher in May as oil prices rose off their April lows. Producer input prices are likely to have fallen again, reflecting the modest rise in sterling plus falls in the cost of a range of non-oil commodities. Also expected at the same time is the latest April House Price Index. The G8 leaders summit continues in Northern Ireland, ending later today, with expectations for today's talks to focus on tax avoidance issues.

(pare/closed(00:00 GMT +02:00)/change, %)

EUR/USD $1,3362 +0,11%

GBP/USD $1,5718 +0,08%

USD/CHF Chf0,9226 +0,21%

USD/JPY Y94,68 +0,58%

EUR/JPY Y125,52 -0,03%

GBP/JPY Y148,78 +0,69%

AUD/USD $0,9548 -0,22%

NZD/USD $0,8001 -0,51%

USD/CAD C$1,0186 +0,17%

01:30 Australia RBA Meeting's Minutes June

04:30 Japan Industrial Production (MoM) (Finally) April +1.7% +1.7%

04:30 Japan Industrial Production (YoY) (Finally) April -2.3% -2.3%

06:00 Eurozone ECB President Mario Draghi Speaks

08:30 United Kingdom Retail Price Index, m/m May +0.3% +0.2%

08:30 United Kingdom Retail prices, Y/Y May +2.9% +3.1%

08:30 United Kingdom RPI-X, Y/Y May +2.9% +3.1%

08:30 United Kingdom Producer Price Index - Input (MoM) May -2.3% +0.1%

08:30 United Kingdom Producer Price Index - Input (YoY) May -0.1% +2.5%

08:30 United Kingdom Producer Price Index - Output (MoM) May -0.1% 0.0%

08:30 United Kingdom Producer Price Index - Output (YoY) May +1.1% +1.4%

08:30 United Kingdom HICP, m/m May +0.2% +0.1%

08:30 United Kingdom HICP, Y/Y March +2.4% +2.6%

08:30 United Kingdom HICP ex EFAT, Y/Y May +2.0% +2.1%

09:00 Eurozone ZEW Economic Sentiment June 27.6 29.4

09:00 United Kingdom Inflation Report Hearings Quarter I

09:00 Germany ZEW Survey - Economic Sentiment June 36.4 38.2

12:30 U.S. Building Permits, mln May 1.017 0.977

12:30 U.S. Housing Starts, mln May 0.853 0.950

12:30 U.S. CPI, m/m May -0.4% +0.1%

12:30 U.S. CPI, Y/Y May +1.1% +1.4%

12:30 U.S. CPI excluding food and energy, m/m May +0.1% +0.2%

12:30 U.S. CPI excluding food and energy, Y/Y May +1.7% +1.7%

16:00 G8 G8 Meetings

20:30 U.S. API Crude Oil Inventories June +9.0

22:45 New Zealand Current Account Quarter I -3.26 -0.64

23:50 Japan Adjusted Merchandise Trade Balance, bln May -764.4 -892.8