• Bears Pound Dollar On Data
• Further Rate Stabilization Notions Look Imminent
• Balancing Comments Make For Choppy Yen Session

US Dollar
The volume of data on the day couldn't help the pessimism surrounding the greenback as traders took advantage of the session to further the bearish momentum seen yesterday.  Sentiment is seemingly shifting to a focus on the teetering U.S. infrastructure, current account deficit and lack of funding through foreign investors, as it becomes increasingly suggestive of a near term end to the monetary tightening bias.  Lending to the downside for the dollar was today's consumer prices report.  Although rising in the headline by 0.1 percent, the core figure climbed only incrementally by 0.1 percent on a 0.2 percent consensus.  This brought figures relatively inline with estimated figures, and even helped to drop the annualized figure to a 3.6 percent print from the previous 4 percent seen in January.  With a higher initial jobless claims figure and the week's disappointing trade figures, it looks very possible that central bankers will make the upcoming March decision one of their last.  Pointing towards a larger emphasis on economic data, Chairman Ben Bernanke doesn't have a lot to pull from.  Of note are the most recent trade figures that openly confirm the inability to fund the current deficit as it approaches 7 percent of gross domestic product.  With a shortfall similar to what was witnessed in the New Zealand economy in previous months, it isn't deniable that the dollar looks to have lots of bearish sentiment to contend with in the near term.

Euro
With the day's U.S. inflationary suggestions showing a muted presence, traders sided with the fact that European counterparts faced a mild rise in consumer prices.  Rising in line with consensus estimates, inflation grew at a rate of 0.3 percent following a dip of 0.4 percent in the month of January.  This kept the yearly core figure at 1.2 percent, consistent with previous figures.   Coupled with the increase in output and export activity that we have witnessed in previous months, overall sentiment is confirming another hike of 25 basis points, keeping in the interest rate theme currently looming the markets.  As a result, with the subsequent hike, the gap between the single currency and its counterparts look to narrow with potential "hold" stances in both the U.S. and British economies, ultimately bolstering the underlying currency in the near term.  Should tomorrow's industrial production figures confirm earlier expansion notions, traders can expect further upside on mounting hike speculation.

British Pound
Reversing earlier sentiment that consumer consumption may be to the downside, retail sales figures rose on the month.  Expected to increase by a 0.4 percent monthly comparison, the actual figure showed improvement rising 0.5 percent following a lowly 1.3 percent decline in the previous month.  In addition, housing prices rose in accordance to the most recent survey by the RICS house price balance.  Strengthening the most in 20 months, the percentage of chartered surveyors across England reporting a rise that outweighed reporters that fell, bringing the measure higher by 17 percent.  The figure is almost double the previous month's and lends further confirmation that the housing sector is stabilized and ready to contribute to a rising consumption environment.  With that said, including upticks in manufacturing for consecutive months, market individuals look set on trading the sterling higher as the probability of a near term rate cut thins.  Earlier cut considerations were based on the fact that inflationary pressures, although remaining relatively lofty, look tame heading into 2006 with individual consumption slumped.  Subsequently, a cut would effectively boost consumption rates as it lowers the cost of money to the individual.  However, with notable evidence including the recent CBI trends survey boosting domestic spending, policy makers may hold steadfast as they look to keep price increases stable.  Pound bulls waiting for their chance may finally have an opening.

Japanese Yen
Rising earlier on, the yen retested the psychological 118 figure as comments from Bank of Japan Governor Toshihiko Fukui suggested that it may be a longer period of time before central bankers move to raise interest rates.  Although officially ending the zero rate policy in previous weeks, the formidable shift to a tightening bias remains questionable.  Speaking to a parliamentary committee today in Tokyo, Fukui stated that if central bankers can "judge that inflationary pressures are restrained and the economy can achieve balanced growth, we can keep interest rates at very low levels."  The comments spoke to traders who previously were awaiting a decision as early as next month and now have to cope with uncertainty.  However, although directly affecting markets in the overnight, the comments look to simply be further jawboning by policy makers in attempts to quell discrepancies with previous government sentiment.  The statements come on the heels of yesterday's call by Finance Minister Sadakazu Tanigaki for the Bank of Japan to ensure the stabilization of markets on the ultimate decision.  As a result, with further rhetoric surely to follow from both parties, market participants are keeping in mind  consecutive quarters of growth and rising, although incremental, consumer prices in fueling downside for the currency pair.

Kathy Lien is the Chief Currency Strategist at FXCM.