The same early winter chill that suddenly descended into the canyons of Wall Street, temporarily spiking heating oil futures to nearly $2/gallon yesterday appears to have cooled considerably the dollar bullish sentiment of the FX market. While the greenback is reacting in part to the natural disasters that have recently befallen US including the near paralysis of all economic activity in South Florida and the unseasonably cold weather throughout the  Northeast, the currency's troubles may lie with the man made disasters that are about to unfold.   According to the latest press reports, Special prosecutor Patrick Fitzgerald  is on the verge of asking for indictments against senior White House officials  including possibly the sitting Vice President of the United States while on the economic front the SEC is looking into GM's accounting practices vis a vis its pension obligations in the recent bankruptcy of its spin-off Delphi.

As President Bush suffers from Nixonian like approval ratings and given the fact that the currency market abhors a power vacuum is it any wonder that the greenback has wobbled this week? Although today traders attention may temporarily turn to  the Durable Goods numbers and New Home Sales, neither report is expected to show any material strength and the greenback is unlikely to reverse euro's rise unless the data offers a substantial upside surprise. 

In any event,  political news may trump any economic data on the US side, especially if is indeed as dramatic as some market players expect. With the Euro-zone reports showing no weakness as both German Consumer confidence and French Manufacturing survey both produced above consensus results, any dollar rally will have to be triggered by US news alone - a prospect that for now at least argues for further gains in the EUR/USD.

Boris Schlossberg is a Senior Currency Strategist at FXCM.