Overall, the dollar traded stronger overnight and starts the U.S. session higher against most of the other major currencies, except the Japanese yen. Today’s U.S. economic calendar is loaded with low to mid tier releases which may affect the greenback.

The Euro (Eur/Usd) The euro rose steadily during most of the Asian session, testing the 1.3600 level but declined as the London open approached and enters the final U.S. session of the week just above the 1.3550 level. Economic reports were lower to mid tier releases this morning and had little effect on the pair.

In January German import prices fell by 0.5%, extending the record pace of declines set over the last few months. From January 2008 the index is down by 5.4%, the biggest YoY decline since 1999. Industrial orders fell in the Euro-area in January for a sixth consecutive month. The market anticipated industrial orders would fall 5.7% in January, instead of the released number that saw orders decline by 3.4%. The previously released number, for the month of December, was revised much lower, to a record of -8.0%.

The Pound (Gbp/Usd) The cable stair stepped higher during the Asian session as the dollar weakened but gave up all of the gains at the London open as the dollar strengthened amid U.S. futures turning negative. The pair enters the U.S. session virtually unchanged from the Asian open, near the 1.4450 area.

In the fourth quarter, the U.K. economy contracted by 1.6%, revised slightly lower from the preliminary releases. In the third quarter, the U.K. economy posted a -0.7% read. The two consecutive quarters indicate the U.K. economy has officially entered into a recession. U.K. current account deficit reached £7.6 billion in the fourth quarter of 2008, down from a deficit of £8.2 billion in the second quarter, revised from £7.7 billion. The fourth quarter deficit was equivalent to -2.1% of GDP compared with -2.3 per cent in the previous quarter.

The Aussie (Aud/Usd) The aussie traded in a 60 pip range overnight, falling during the Asian session, back below the 0.7000 level which had been broken to the upside on Thursday. Asian equity markets were mixed overnight and U.S. futures have turned negative. The pair continues to trade in a tight range.

The Cad (Usd/Cad) The Canadian dollar strengthened slightly during the Asian trading hours but up those gains as the European session got underway and enters the U.S. session a mere 10 pips lower, but below the 1.2300 level. Oil prices retreated overnight as the deepening recession in Japan curbs demand. There are no Canadian economic releases scheduled for today so oil prices and equities will influence the pair.

The Swissy (Usd/Chf) The swissy moved in a fairly wide 65 pip range overnight, with most of the moves coming during the early stages of the European session as the dollar strengthened. The pair enters the U.S. session trying to break above Thursday’s high, just below the 1.1300 level. The 200 day simple moving average continues to provide support for the pair.

The Yen (Usd/Yen) The yen advanced 135 pips yesterday, and broke above a 4 hour trend-line that held the pair since the beginning of March. The yen also re-tested the 99.00 resistance area yesterday, but failed to break above. During the Asian session, the yen fell approximately 100 pips but started to recover during the European session.

Retail sales in Japan have declined again in February by the most in the past seven years. Sales decline 5.8 percent on the month from one year ago. This was after dropping 2.4 percent the previous month. Japans consumer prices have fallen to a flat 0.0 percent reading in February. This is the second time in over a year that consumer prices have not risen as a result of the eminent recession that is entering the country. A drop in exports has forced corporations across Japan to cut workers and lower hours and pay, which in turn leaves less for consumers to spend.