The greenback edged higher against the majors, pushing the euro towards 1.2515 and the yen just shy of the 94-level. US equities continued to slip lower, with the Dow Jones drifting to its lowest intra-day level since November 2008 around 7520. The key highlights of the session were another bout of soft data, details regarding President Obama's foreclosure plan and the minutes from the last FOMC meeting.
Economic reports released earlier in the session revealed further deterioration in US fundamentals and highlighted the dismal outlook in the housing market. January housing starts plunged to a record low to 466k units compared with a revised 560k units from December, plummeting by nearly 17%. Building permits eased by 4.8% to 521k units versus 547k units. Meanwhile, industrial production remained mired in negative territory at -1.8%, improving marginally from the previous month at -2.0% and capacity utilization slipped to 72.0% from 73.60%.
President Obama unveiled the details for the government's plan to stem further declines in the housing market. The plan calls for a $75 billion package to ease foreclosures by lowering mortgage payments to 31% of a borrower's monthly income. The details specifically target homeowners and is aimed to avert the additional strain flood of foreclosures would have on the economy.
The minutes from the Fed's January meeting echoed a dismal outlook among the Board members. The minutes stated all but a few saw the risks to growth as tilted to the downside, seeing a significant risk that the economic recovery could be delayed and initially quite weak. The Fed slashed its growth forecast for the year by 0.5% to 1.3% and anticipates long-term growth around 2.5%-2.7% and unemployment rate around 4.8%-5%.
The euro came under pressure in the Wednesday session amid a dollar rally, falling to its lowest level since November 2008. Further losses will be tempered at 1.2530, backed by 1.25 and 1.2470. Subsequent floors are seen at 1.2440, followed by 1.24 and 1.2350. Meanwhile, on the upside, resistance starts at 1.2570, backed by 1.26 and 1.2640. Additional gains will target 1.2670 and 1.27.