Dollar Under pressure ahead to busy Economic calendar

The U.S. currency has fallen against 12 of the 16 most- active currencies since the Federal Reserve lowered interest rates last week to prevent a housing slump and credit market losses from causing a recession. Futures traders are increasing bets the Fed will decide on a further cut at a Jan. 30 meeting. The Dollar is trading around the levels of 1.4685 against the Euro, around the levels of 106.60 against the Yen and around the levels of 1.9790 against the Sterling.

The dollar opened the week with little changed against the euro ahead to U.S. government report on sales of new homes. Sales of new U.S. homes slowed to an annual pace of 645,000 units in December from 647,000 the previous month, it’s the lower number in 12 years.
Sterling fell against the yen and the after BoE policymaker David Blanchflower told the Guardian newspaper in an interview that the central bank needs to cut rates and stop worrying about inflation. The remarks helped stoke expectations the BoE will cut rates by a quarter-point at its policy meeting in February, taking them down to 5.25 percent and making the pound less alluring for yield-seeking investors. The BoE made its first rate cut for over two years in December.

The yen rallied broadly against all 16 of the most active currencies as a slide in regional stock markets heightened risk aversion and crimped demand for higher-yielding currencies and assets.

Asian stocks, especially in China, are really performing badly, This is causing risk aversion among investors, prompting yen- buying China's main stock index tumbled more than 7 percent, as heavy snow across central and eastern China stoked worries about damage to the economy, while Japanese shares fell more than 3.5 percent. "It's the familiar pattern of risk aversion caused by falls in share prices," said Koji Fukaya, senior currency strategist for Deutsche Securities.

Stock markets remain a driving force for currencies as market players seek clues on whether to tiptoe back to risky carry trades, in which the low-yielding yen is used as a source of cheap funds to buy higher-yielding currencies.

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