Today’s US Dollar Trading
 
• USD has range-bound trade despite news
• CPI as expected, Housing data worse
• EURO scores a lifetime high

Overnight Preview

• Look for the USD to consolidate with weaker tone
• Book-squaring ahead of US data tomorrow likely

Looking Ahead

• 9:00 AM CDT Thursday Philly Fed forecast -14.0

Yesterday, the Greenback spent most of the trading day with bullish momentum against the majority of its currency pairs and crosses on the back of surprisingly strong U.S inflation and manufacturing data releases. The greenback added 0.35% to its value against the EUR locking the session below the rate of 1.58, after the first day this week for the USD to appreciate. Also, the strong U.S data release assisted the USD recovery against the Sterling and the JPY, stopping the bearish momentum which characterized the USD since Bernanke's speech last Wednesday.

Overnight Asia/Europe

• USD firmed in Asia on G7 comments
• Faltered in European trade

Today’s Economic Reports

• 7:30 AM CDT Retail Sales forecast +0.1%, no factor

Looking Ahead

• 7:30 AM CDT Tuesday PPI forecast +0.4%, core +0.2%
• 8:00 AM CDT Tuesday TICS

Last week we saw the return of significant volatility to the Forex market. Amidst fears of recession in the US, due to the housing and credit crisis as well as poor labor numbers, investors once again became weary of the dollar. The last part of March heading into April saw the greenback swing up and down after a host of key events and interest rate cuts dictated its movement.

Yesterday, the greenback fell to its lowest mark since the beginning of April decreasing sharply against a majority of it's currency rivals. The EUR/USD pair shot up 150pts yesterday, crossing the key psychological rate of 1.5800 for the first time since the positive ISM Manufacturing Index release on April 1st. Expectations for the near future look to hold similar characteristics as the upcoming US calendar doesn't look to have much that can help pull the dollar out of trouble. Yesterday's bearish dollar trend was especially concerning due to the lack of indicators released from both the US and the Euro-zone, as it seems that the greenback crash comes mainly on the heels of traders fearing the US economy woes are not over. Yesterday's standout event from the US calendar was a speech by Fed Chairman Ben Bernanke; the speech did include criticism of the financial literacy system in the US.

Today’s US Dollar Trading
 
• USD two-sided overnight
• Breaks lower during New York but still no new range
• Equities fall driving USD /JPY lower

Overnight Preview

• Look for follow-through selling of USD
• Book squaring ahead of US data in the morning

Looking Ahead

• 7:30 AM CDT Thursday Balance of Trade forecast -57.4B

Overnight Asia/Europe
 
• USD two-sided in range bound trade
• Overnight news thin but important
• BOJ holds rates steady as expected

Today’s Economic Reports

• None of note in the US

Looking Ahead

• 7:30 Am CDT Thursday Balance of Trade – 57.4B
• Friday Michigan Sentiment and G7

The USD rose against the EUR yesterday on speculation the Fed is close to ending the biggest series of Interest Rate reductions since 1984. Stability in equity and credit markets raised optimism that the worst of the financial crisis might be over, encouraging investors to buy riskier assets. Yesterday, the U.S. currency advanced 0.3% to 1.5693 vs. the EUR, however later deteriorated and closed trading at 1.5718.

Today’s US Dollar Trading
 
• USD ends a bit firmer but volumes light
• Solid two-way action all day
• Traders note that market seems sidelined ahead of rate announcements

Overnight Preview

• Look for more two-way action, USD likely to stay in-range
• Look for S/R to keep rates range bound

Looking Ahead

• 9:00 AM CDT Pending Home Sales forecast -0.5%
• 1:00 PM CDT FOMC minutes

Overnight Asia/Europe
 
• USD higher overnight
• No real news driving trade
• Two-way action with stops helping to firm USD

Today’s Economic Reports

• None of note in the US

Looking Ahead

• 9:00 AM CDT Pending Home Sales forecast -0.5%
• 1:00 PM CDT FOMC minutes