After a US dollar dominated session in domestic trade on Friday, the greenback's appeal has well and truly waned with the US dollar index which measures the dollar's value relative to six major foreign currencies is currently trading .12 per cent lower at 80.45. Investor reaction to the Fed's decision to lift the discount rate to 75 bps initially saw US dollar strengthen across the board - but dollar gains were unwound with help of some less than convincing inflation data and a reaffirmation by the Fed for benchmark interest rates to remain on hold. US Consumer Price Index rose fell short of estimates to rise 0.2 percent to reflect an annual inflation rate of 2.6 percent. Economist had predicted CPI to rise 0.3 or 2.8 percent on year. Despite the Fed's decision to lift the discount rate suggesting a gradual removal of economic stimulus, the banks stance for interest rates to remain at exceptionally lows levels for an extended period remains intact, with the Fed indicating they do not signal any change in the outlook for the economy or for monetary policy.
Across the Atlantic, UK Retail Sales fell short of estimates recording a 1.8 percent contraction in the month of January against the expected decline of 0.5 per cent - representing an annual contraction of 0.9 percent.
After Friday morning's impulse pummelling of the Aussie dollar, the local unit has continued to regain composure kicking off the week above 90 US cents. Local economic feedback this morning includes New Motor Vehicle Sales for the month of January; however we expect equity market movements to the key barometer for the local unit in domestic trade. At the time of writing the local unit is buying 90.1 US cents.