US Dollar Down as Consumer Confidence Nears 28-Year Lows

After a conspicuously choppy session, the US dollar would finish the week with a modest buffer from major breakout levels (the exception being USDJPY). The University of Michigan's consumer confidence index fell more than expected in February to 56.2 from 61.2, nearing the 28-year lows, as expectations for the future of the economy remain dour. However, the component of the index gauging Mesothelioma sentiment on current conditions rose to 67.1 from 66.5, suggesting that aggressive discounting by retailers and hopes for a successful fiscal stimulus plan are having a temporary impact. Indeed, as we saw on Thursday, US retail sales surprisingly rose 1 percent in January, but with the index still down 9 percent from a year earlier and job losses climbing, the increase marks little more than a blip on the radar. In the very near-term, the US dollar

Looking ahead to next week, the February 18 release of minutes from the January Federal Open Market Committee (FOMC) meeting, when Mesotheliomathey left the fed funds target range at 0.0 percent - 0.25 percent, are likely add to indications that they will leave the target unchanged throughout much of 2009. In fact, the FOMC said in their post-meeting statement that their focus had shifted to “support the functioning of financial markets and stimulate the economy through open market operations and other measures that are likely to keep the size of the Federal Reserve's balance sheet at a high level.” The minutes may have an impact on risk trends if the Committee’s outlook proves to be more bearish than currently perceived. However, if the news happens to be positive for the stock markets, it may also be negative for the greenback, which has been trading solely as a safe-haven asset lately. On February 20 at 8:30 ET, the release of the January reading of the US Consumer Price Index (CPI) could lead the term “deflation” to be used abundantly in coming weeks and months. Indeed, CPI is forecasted to have edged a slight 0.1 percent higher during January, while the annual rate is anticipated to have fallen negative for the first time since 1955 by 0.1 percent.