The greenback was mixed at the start of the week, trading higher against the yen and easing versus the euro. US data will garner the lionâ€™s share of the attention this week, with much scrutiny over the prospects for the economy to slip into recession. On the whole, the reports are seen reflecting further deterioration in economic fundamentals with continued declines in housing, consumer confidence, manufacturing and overall growth â€“ which are seen weighing on the greenback.
Existing home sales in January was better than expected, declining by 0.4% versus a 2.2% drop from December at 4.89 million units. Tomorrowâ€™s US economic calendar consist of January PPI, February consumer confidence and the Richmond Fed survey. Although inflation continues to linger near the higher end of the Fedâ€™s comfort zone, given the sharp deterioration in growth â€“ pricing pressures have taken a backseat to growth as the FOMC has aggressively moved to stimulate the economy.
Further, we continue to look for the Fed to cut rates again in March, by 50-basis points to 2.5%.