The US dollar softened throughout the New York session as mixed reports from the housing sector reaffirmed much of the dour sentiment on everything from construction to subprime loans.

The US dollar succumbed to softness in the session as treasury yields continued to move lower in New York.

As expected, the consumer prices report set the tone for the US dollar early on in the New York morning. It wasn't industrial production, TIC or even current account that set the day’s theme. It was inflationary pressures.

With the stock market continuing to rise, it is not surprising that the US dollar hit a new five-year high against the Japanese yen today.

It's no surprise that currency pairs like AUD/JPY, GBP/JPY and EUR/JPY all rose in lockstep with US stocks, which did not begin to take off until the release of the Beige Book report.

Even though there was no major US economic data released today, we had very volatile price action in the financial markets.

The US dollar is stronger across the board but intervention in the New Zealand dollar was by far the biggest event of the day. There was actually no data on the US calendar and only a few speeches by Fed officials.

Having just hit a 22-year high, it is certainly surprising to see the New Zealand dollar down over 1.5 percent across the board.

For the past few months, we have either seen carry trades follow the ebb and tides of US stocks or the reverse.

US stocks dropped for the third day in a row, adding pressure on carry trades. Interestingly enough, the US dollar rebounded strongly today as 10-year yields shot to a 10-month high above 5 percent.