The dollar strengthened against its peers cutting losses from earlier in the session however poor manufacturing data curtailed the dollar’s advances as the data caused the market to question the overall strength of US economic recovery. The Federal Reserve Bank of New York reported that its general business conditions index dropped from a reading of 10.0 in January to 7.8 in February while experts had forecast a decline to 8.5. The National Association of Home Builders reported that its Housing Market Index dropped to its lowest level in 4 months from 57.0 in January to 55.0 in February.

The euro strengthened against the dollar following the release of data from the ZEW Center for Economic Research which revealed that its German economic sentiment index jumped to its highest level since last year February to 53.0 up 4.6 points from January’s 48.4. Experts had forecast a reading of 55.0. While Greece’s current bailout program is set to expire at the end of this month with a deadline of this Friday to extend in order to avoid not having any money, the market continues to be watchful of the situation as Greece could end up being no longer a part of the euro zone.

The pound weakened against the dollar following figures released by the UK Office for National Statistics which revealed that UK consumer price inflation wound down from 0.5% in December to 0.3% in January matching forecasts. In January consumer price inflation decreased by 0.9% on a month over month basis while a decrease of 0.8% was forecast. Core CPI climbed by 1.4% in January from 1.3% in December which was just above expectations of 1.3%.

The yen weakened against the dollar with the pair trading back over its 119 handle declining across the board as the market’s appetite for risk increases as a deal in Greece is expected for tomorrow. The yen had strengthened towards the end of last week after the Bank of Japan had highlighted that it does not want to continue to see a weaker yen.

The Australian, New Zealand and Canadian dollars strengthened against the dollar. The Reserve Bank of Australia announced that the Aussie dollar is still higher than most estimates of core value and that a weaker currency is required for the economy to increase growth and inflation. The central bank’s board outlined reasoning for waiting until next month to reduce its key interest rate. The loonie still advanced overlooking figures from Statistics Canada which revealed that foreign securities purchases decreased by CAD 13.55 billion in December compounding forecasts for an increase of CAD 5.35 billion.

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