Dollar remains soft ahead of a busy day but after all, there is no decisive momentum to resume recent down trend in the greenback yet. Financial markets generally tread water with stocks, gold and oil consolidating in tight range. Most volatility is found in sterling so far as the pound is lifted by solid housing data released overnight. Aussie, on the other hand, trades with a mild undertone on less hawkish than expected RBA minutes. Nevertheless, volatility will likely build up considering the pile of important data release ahead which include UK CPI, German ZEW, US retail sales, PPI, Empire State manufacturing, as well as Bernanke's speech.

RICS house price balance showed the first positive reading of 10.7% since July 2007, meaning that respondents to the survey who said price rose in August out-numbered those who reported decline by nearly 10.7%. Sterling was lifted by further sign of stabilization in the UK housing markets. However, traders are still cautious, remembering Ernest & Young's Item Club said yesterday that UK housing market will resume the slump next year as squeeze on mortgage lending persists. Pound traders will also look into today's CPI report which is expected to show 0.3% mom rise in headline CPI even though yoy rate is expected to slow from 1.8% to 1.4%. German ZEW economic sentiment is expected to rise for the second consecutive month to 60 in Sep.


In US session, retail sales is expected to rise sharply by 1.8% in August while ex-auto sales is expected to climb 0.4%. PPI is expected to rise 0.8% mom in August with core PPI rising 0.1% mom. Empire statement manufacturing index is expected to rise to 14 in Sep. Bernanke will speak on financial crisis in Washington.

RBA minutes released overnight said the committee members were conscious of the need to balance the task of controlling inflation over the medium term with that of supporting economic recovery considering relative high underlying inflation and substantially stronger than expected economic activity. The balance was best struck by leaving the cash rate unchanged for the time being. Global economy is expected to be on a sustained, if modest, recovery path, though it was still too soon to be confident of this assessment. After all, the minutes hinted that RBA is no rush to start tightening again.

The dollar index continues to stay in tight range above 76.47 today so far. Another fall might still be seen to next key support level at 75.89. But after all, there is no change in the view that the current decline is the fifth wave of the five wave sequence that started in March at 89.62. Hence we'd expect strong support from around 75.89 level to conclude the fall and at least bring sizeable short term rebound. Break of 78.93 resistance will be an important signal that the index has bottomed out.

23:01GBPRICS House Price Balance Aug10.70%-0.10%-8.10%-5.70%
1:30AUDRBA Meeting Minutes ---- 
7:15CHFIndustrial Production Q/Q Q2 7.30%-13.10% 
8:30GBPCPI M/M Aug 0.30%0.00% 
8:30GBPCPI Y/Y Aug 1.40%1.80% 
8:30GBPCore CPI Y/Y Aug 1.60%1.80% 
8:30GBPRPI M/M Aug 0.20%0.00% 
8:30GBPRPI Y/Y Aug -1.50%-1.40% 
8:30GBPDCLG UK House Prices Y/Y Jul -9.50%-10.70% 
9:00EURGerman ZEW Economic Sentiment Sep 6056.1 
9:00EUREurozone ZEW Economic Sentiment Sep 6054.9 
12:30CADNew Motor Vehicle Sales M/M Jul 5.00%-0.60% 
12:30CADLabor Productivity Q/Q Q2 --0.30% 
12:30USDAdvance Retail Sales Aug 1.80%-0.10% 
12:30USDRetail Sales ex-autos Aug 0.40%-0.60% 
12:30USDPPI M/M Aug 0.80%-0.90% 
12:30USDPPI Y/Y Aug -5.40%-6.80% 
12:30USDPPI Core M/M Aug 0.10%-0.10% 
12:30USDPPI Core Y/Y Aug 2.20%2.60% 
12:30USDEmpire Manufacturing Sep 1412.08 
14:00USDFed's Bernanke Speaks on Financial Crisis in Washington ---- 
14:00USDBusiness Inventories Jul -0.80%-1.10%