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USD - America's currency managed to close out last week higher against its major world counterparts, though the ephemeral rally quickly lost steam this morning on the back of dovish Fed rhetoric. A battery of key data last week, though somewhat mixed, nevertheless undergirded the dollar, bolstering sentiment that a nascent economic recovery in the US was well underway: Empire Manufacturing (23.51 in Nov. vs. 34.57 prior); Inflation Data (PPI: 0.3% in Oct. vs. -0.6% prior; CPI: 0.3% in Oct. vs. 0.2% prior); Total Net TIC Flows ($133.5B in Sep. vs. $25.3B prior); Housing Starts (529K in Oct. vs. 573K prior); Initial Jobless Claims (505K for 11/14 vs. 505K prior). Finally, the "knock-out punch" needed to deliver an ultimate victory to the USD for the week was the very robust Philly Fed Index (16.7 in Nov. vs. 11.5 prior). The greenback, however, broke momentum this morning and fell the most in two weeks against its major trading partners, save the JPY, after St. Louis Fed President Bullard commented that policy makers should "keep stimulus measures in place beyond March [2010]". However, a betterthan-expected Existing Home Sales (6.10M in Oct. vs. 5.70M exp.) this morning buoyed the dollar somewhat, helping to counter the greenback's precipitous slide. Markets are currently focused on the fate of US (and global) monetary policy(s). After this morning's Fed comments, traders have become bearish on the probability of interest rate hikes anytime in the foreseeable near-term. Fed Fund Futures contracts on the CME now show a
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