The US Dollar consolidated near multi-decade lows against most major currency pairs, but a sharp British Pound rally led it to fresh 26-year peaks against its cross-Atlantic counterpart. A bullish US Empire Manufacturing report was not enough to force a greenback bid, as currency traders are clearly sticking to the sidelines ahead of the week’s significant event risk. Conversely, expectations of strong UK data are leading Cable higher ahead of a veritable minefield of economic reports.

The Euro traded largely unchanged at $1.3779 through time of writing, while the Japanese Yen firmed slightly to ¥121.78 as of 17:00 GMT. Meanwhile, the British Pound stole headlines as it forged as high as $2.0402 through the morning’s open. A bit of US session consolidation left the GBPUSD at $2.0367, but the pair shows few signs of slowing its ascent through short-term trade.

US Empire Manufacturing data provided the sole piece of noteworthy event risk through Monday’s open, printing well-above consensus at 26.5 versus 18.0 forecast. Indeed, the New York-region report showed the best manufacturing performance since June of 2006. A jump in new orders and an improved employment situation led the index higher, likewise confirming other signs that domestic industry will see solid growth through the medium term. The news was nonetheless not enough to force a substantive dollar bid. An initial 5-minute upturn was very short-lived as the Dollar Index continued its losing ways through late-morning price action.

Domestic equity markets continued to plow to new heights despite the bearish outlook for the US currency. The Dow Jones Industrial Average set all-time highs within striking distance of the 14,000 mark, adding 72 points to 13,979 through the afternoon. Other major indices were comparatively unchanged, with the S&P 500 just 0.1 percent improved to 1,554, while the NASDAQ Composite remained stationary at 2,708. Analysts cited the morning’s Empire State Manufacturing report for much of the renewed bullishness, while speculation for mergers and acquisitions led a rally across Telecom industry shares.

The US Fixed Income market retraced some of its recent losses and sent yields lower across the board. The 10-Year Treasury Note loss 4 basis points in yield to 5.05 percent, undoubtedly adding to the dollar’s woes. It will be important to watch developments in the fixed income market through the short term, as any further tumbles in benchmark yields will only add to the greenback’s losses.

John Kicklighter is a Currency Strategist at FXCM.