Traders overlooked disappointing January retail sales numbers as the dollar was mixed versus the major currencies. Retail sales for the previous month failed to meet economists' expectations, positing a 0.3% increase on expectations of a 0.5% jump. December's sales numbers were revised lower to 0.5% from 0.6%, underscoring the negative tone of the report.
Other US economic data showed investors continued to increase their purchases of long term US securities as the TICS capital flow report released results showing 69.5B USD in purchases. Expectations were for purchases to total 91.3B.
When discussing the President's Federal budget plan, Treasury Secretary Timothy Geithner said the budget problems cannot be ignored and are not a result stemming from the financial crisis. A return to financial prudence will be needed and US deficits are too high at this time.
At the end of the trading day, the dollar was mixed with gains coming versus the euro and the Aussie dollar. The EUR/USD finished at 1.3485 after opening the day at 1.3507. The dollar was up sharply versus the yen as the USD/JPY closed near its high of 83.80 from its opening day price of 83.40. The AUD/USD fell below parity to 0.9980 from 1.0041.
Today traders will be focusing on the release of key US economic data as well as the release of the Fed Meeting Minutes. At 13:30, monthly building permits will be released and also month over month PPI. Inflationary pressures are nonexistent in the US and traders will focus on the housing data and any changes in the Fed's economic expectations.
The EUR/USD is currently trading in a bearish channel after turning lower following its failure at 1.3860. Further declines are expected with a possible target at 1.3250, the 61.8% retracement of the January to February move. Support is found at the bottom channel line at 1.3390. Resistance comes in at 1.3570 followed by last week's high at 1.3740.