The greenback continued its precipitous slide throughout last week, closing-out the final trading session with its tenth consecutive bearish close (on a trade-weighted basis), and falling to a new low for the year relative to its major world counterparts. Notwithstanding the battery of benign economic data releases last week, the allure for the USD as a safe haven has all but dissipated, and in turn, the greenback has supplanted the JPY as the favored carry-trade currency for funding investments, due to its extremely low interest yield. Inflation data showed an appreciable uptick in August (PPI: 1.7% vs. -0.9% prior; CPI: 0.4% vs. 0.0% prior), while Advance Retail Sales soared to unexpected heights (2.7% in Aug. vs. -0.1% prior). Even robust improvements in the long-ailing manufacturing sector surpassed market expectations (Empire Index: 18.88 in Sep. vs. 15.00 exp.; Industrial Production: 0.8% in Aug. vs. 0.6% exp.). Housing Starts also edged up to a high for 2009 (598K in Aug. vs. 589K prior), and while this morning's Leading Indicators Index fell slightly short of expectations (0.6% in Aug. vs. 0.7% exp.), there is a growing sense that a nascent economic recovery is underway. All eyes will be focused on this Wednesday's FOMC rate announcement. While there is zero expectation for any adjustment to the actual interest rate levels, markets will be closely attuned to the accompanying policy bias statement in hopes to garner any further insight into the near-term direction of US monetary policy, and the health of the world's largest economy. With mostly second-tier data releases on tap for the balance of this week, the USD will likely take its cues from equity markets, as well as economic and political developments in the Eurozone and Japan.