The US dollar fell against major currencies on Friday, and posted its worst weekly performance against the Euro in 2008, on the belief that US interest rates will need to be cut further in the coming months to boost economic growth. The Euro strengthened from lows around $1.4630 to touch $1.4705 and was last seen trading at $1.4638 10:00GMT.
Friday's US Industrial Production month on month came out as expected at 0.1%. This flat to mildly positive result in February was helped by gains in utilities. The Empire manufacturing survey fell sharply in February -11.7 from 9.0 in January, relative to expectations for a small fall to 6.5.
University of Michigan consumer confidence fell in February after unexpectedly rising in January. The index fell to 69.6 from 78.4, well below forecasts. The survey proves tighter credit conditions, rising oil prices and the unstable housing market are hitting consumers in the hip pocket.
Sterling has softened as Alistair Darling announced that Northern Rock will be nationalised. 'Stay away from sterling,' Dwyfor Evans, a strategist at State Street Global Markets in Hong Kong, said in an interview with Bloomberg Television. 'The Northern Rock news suggests continued instability in the U.K. financial sector. We're also expecting a slowdown in consumer spending.' The pound reached $1.9640 this morning and has fallen away ever since. Sterling was last seen trading at $1.9509 8:30GMT.
The drip feed of data is expected to be quiet today, as the US financial markets are closed due Presidents day holiday. Although investors are expected to keep one eye on the Northern Rock situation, as shareholders in the UK bank have been impoverished due to nationalisation.
The Reserve Bank of Australia releases its Monetary Policy meeting minutes early tomorrow morning. The hawkish report is expected to support the Aussie's caning of the greenback. The Australian dollar was last seen trading at $0.9115 9:50GMT.
Canadian analysts will focus on a speech delivered by the newly appointed Bank of Canada chairman Mark Carey. His speech titled, 'The Implications of Globalisation for the Economy and Public Policy,' is expected to show his views on short term interest rates. Although the Canadian housing sector is not in dire straight, it will heavily impact monetary policy.
