The US Dollar moved down slightly against the majors but remained within the weeks range yesterday. The volatility surrounding the Greenback has been relatively quiet this week in comparison to other weeks this year. However, it is important to continually process its fundamental health to see where it lies on the risk spectrum when things are once again moving. Yesterday the January trade deficit unexpectedly contracted to $37.3 billion from its previous one-year low. The first drop in exports in nine months is discouraging and a drop in imports suggests Americans are cutting back on their spending. There is two key indicators released today, both surrounding the consumer. Firstly retail sales are likely to fall for February mainly due to the poor weather while the University of Michigan consumer confidence figure is expected to increase.

The Euro tipped higher for the second day. The central bank’s monthly report reiterated that interest rates remain “appropriate,” and said that the large deficits in the economies operating under the single-currency carries an additional burden on monetary policy. Moreover, the ECB pledged to “provide liquidity support to the banking system,” while gradually phasing out its emergency measures, and went onto say that its decision to tighten its terms of lending will “ help to avoid distortions associated with maintaining non-standard measures for longer than needed.” At the same time, Governing Council member Yves Mersch said that the push for a European Monetary Fund is nothing more than “a lot of fantasy,” and cautioned on using “central bank money to bail out fiscal deficits.”

Yesterday the British Pound edged higher as inflation expectations pushed slightly higher for the year. The consumer price expectations rose to an annualised rate of 2.5% from 2.4% in November to mark the highest reading since 2008, this rise could lead the central bank to maintain a wait-and-see approach over the coming months as policy makers aim to balance the risks for the U.K. economy