The U.S. dollar was hammered once again

Previous session overview
On Thursday, the dollar was little changed against the euro despite downward pressure from a batch of weak U.S. data and comments from the Federal Reserve chairman Ben Bernanke that suggested more interest rate cuts are coming.

The U.S. dollar was hammered once again after data showing U.S. housing starts came in short of forecast, falling 14.2% in December.

The euro appreciated against the U.S. dollar yesterday as the single currency tested offers around the US$ 1.4715 level and was supported around the $1.4590 level.

The British pound strengthened sharply against the U.S. dollar today cable tested offers around the US$ 1.9790 level and was supported around the $1.9605 level.

The Australian dollar continued to track lower Friday as yet another round of negative news on Wall Street drove investors away from riskier assets. The Australian dollar fell to a low of US$0.8703 in Asian trading, having climbed to US$0.9008.

The Japanese yen is still the major market mover in today's trading so far, following volatility in the equities markets. The much weaker-than-expected factory survey also added pressure on the dollar and prompted investors to unwind carry trades especially versus the Japanese yen. U.S. currency fell from 107.87 to 106.54 versus jpy.

Market expectation
Market waits for more critical U.S. economic data.

Many exporters s believe that dollar will go up again to the Y110-mark.

Today we have the following news:

GBP Retail Sales for December. Markets focus will now turn to UK retail sales data, which is expected to grow a mere 0.2% mom in Dec and slowed from 4.4% yoy to 3.5% yoy.

GBP/USD is quoting at 1.9713, finally recovering ground and slightly bullish in 4 hours charts.

From US, Michigan consumer sentiments is expected to deteriorate further from 75.5 to 74.9 in Jan. Leading indicators is expected to drop -0.1% in Dec.

EURUSD seems to be supported around the 145.45-level for now. As investors are still pricing in an approximate 44% probability of a 75 bps rate cut and technical analysis doesn't offer any clear cut signals in either direction.

USD/JPY is quoting at 106.72, and the pair continues under the descendant trend line mentioned yesterday, unable to confirm a bullish break trough.