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Dollar Remains Weak after Dismal Data
Dollar weakens sharply across the board, making record low against Euro, Kiwi as well as gold and oil. The greenback remains generally weak in early US session following the release of weaker than expected durable goods orders and new homes sales. Headline durable goods orders dropped most in a year by -5.3% in Jan, even weaker than consensus of -4.0%. Ex transport orders also dropped by -1.6% versus expectation of -1.4%. The contraction suggests that business are already starting to scale back capital spending due to tighter credit conditions. On the other hand, new home sales dropped more than expected by -2.8% from 604k to 588k in Jan, lowest since Feb 95.

In the opening speech in semiannual testimony on the economy before the House Financial Services Committee, Bernanke affirmed the markets that Feb will "act in a timely manner" to "provide adequate insurance against downside risks" to the economy. Such risks include "the possibilities that the housing market or the labor market may deteriorate more than is currently anticipated and that credit conditions may tighten substantially further." Though, Bernanke said that there are "slightly greater upside risks to the projections of both overall and core inflation" due to "further increases in the prices of energy and other commodities in recent weeks". Nevertheless, markets generally take today's speech as an affirmation that further 50bps rate cut is to be seen from Fed on Mar 31.

While dollar weakens broadly, the Japanese yen is boosted across the board too, by risk aversion on weakness in European stock markets, which carries on to early US session. However, Euro was additionally supported by solid data from Eurozone, which saw German Gfk consumer statement unchanged at 4.5. Eurozone M3 month supply growth slowed from upwardly revised 11.6% yoy to 11.5% yoy but beat expectation of 11.3%. Sterling remains the weaker one among the majors as see in price actions in crosses. UK Q4 GDP was unchanged at 0.5% qoq, 2.9% yoy. However, exports dropped -0.5% while import dropped -1.2%. Aussie and Canadian dollar are supported by new record of $967.7 in gold prices and above $102 record oil prices.