Today, we will start on housing data, as it is the reason why the Feds are actually cutting rates lately, as the deep slump in that specific economical sector led to a disastrous credit crisis, forcing policy makers to disregard inflation for a while, and try and focus a little bit on growth levels which were expected to be badly affected by the slump.

Today, an official report from the U.S. Census Report is expected to reveal that housing starts on U.S. land dropped to 1.176 million units in November on an annual rate, down 4.3% from October's reading of 1.23 million, making it the lowest since 1993; while building permits is expected to decline to 1.15 million, from 1.178 million in October. Expectations are just highlighting that a further decline is expected in the U.S. housing sector even after 0.75% rate cuts in the benchmark rate, and 1.25% in the discount rates.

In addition, The National Association of Home Builders/Wells Fargo confidence index held at a record low 19 for a third month in December, showing that no signs of potential improvements is yet to be seen in the economy.

As we said earlier, it has become clear that it is hard for the Feds to continue cutting rates in this reckless haphazard manner in the economy, yet the continuation in the housing slump might force to keep disregarding those huge inflationary pressures, and here is the pickle they are in! Whether to stay dovish, or to turn back to the hawkish stance all over again, and what are the consequences of each decision? God bless you Bernanke!

Now, the Fed has to closely monitor growth data, as they did with inflation, and they have to assign weights to each of them, and decide which is more important, and which will cause the least damage, and accordingly will define the trend for the dollar.

Today's data is really important to tell us where the dollar is heading, as it gained massively last week on speculation that the Fed will not cut rates again, and the short term auction facility might keep the stability in financial markets; however today, we will figure if the housing and growth will be strong enough to change those beliefs back or not.