Dollar remains generally weak and edges to another record low of 1.5650 today. Markets are preparing for another round of inflation data from US. Headline CPI is expected to remain unchanged at 4.3% yoy while core CPI is expected to ease back to 2.4% yoy in Feb. Markets are generally expecting Fed to cut rates by 75bps to 2.25% next week and that expectation is unlikely to change unless we have an unexpected deep drop in the CPI today. Meanwhile, U of Michigan consumer sentiment is expected to deteriorate further from 70.8 to 69 in the month of March.

From Eurozone, just released, Germany HICP was unchanged at 2.9% yoy in Feb, inline with consensus. Eurozone HICP final to be released later today is expected to be unchanged at 3.2% yoy too.

The Japanese yen stabilized but continues to press 100 key level against the dollar. Yen gave back much gains overnight, in particular against the Euro, after US equity markets recovered on S&P reports that predicts an end to subprime writedowns. Aussie was also lifted by carry trades. However, the retreat in yen quickly faded as Asian stock markets gave up earlier gains. Overall, while some consolidation could be seen in yen crosses, further downside is still in favor.