Traders sold the greenback after key economic data reinforced the current dilemma facing the US Federal Reserve. The dollar slipped past the 1.49-level against the euro and relinquished the 0.93-mark versus the Aussie. Persistent fears of the faltering US economy continue to plague the currency with the dollar closing in on its all-time lows against the euro at 1.4966.
The data released today bode poorly for the economy and highlight the bind the FOMC is in â€“ with deteriorating fundamentals and lingering inflationary pressure. The Conference Boardâ€™s index of consumer confidence plunged to its lowest level since March 2003, falling to 75 in February, sharply lower than estimates for a decline to 82 from 87.9 a month earlier. The expectations for the next 6-months also dropped to its lowest level since 1991 at 57.9 versus 69.3 from the previous month.
The present conditions component fell to 100.6 versus 114.3 from January. On the other side of the coin, inflation data revealed that price pressures continue to be a persistent problem plaguing the Fed â€“ as PPI spiked to 7.4% in January versus 6.3% a year earlier and jumping by 1.0% compared with a 0.3% drop in December. The core PPI figures did not fare much better, excluding food and energy, producer prices edged up by 0.4% m/m and 2.3% y/y.