After yesterday’s wild moves, the global financial markets spent the day licking its wounds.

The financial markets have taken a blood bath today with the Dow plunging over 400 points and the dollar hitting a 1-year low against the Japanese yen. Risk appetite is plunging as investors bail out of nearly all assets.

Our action packed week begins tomorrow and judging from today’s price action and analyst estimates, traders are not expecting the US releases to be particularly dollar friendly.

Throughout the past week, the value of the US dollar was determined almost exclusively by foreign developments. The dollar skyrocketed against the Japanese Yen on carry trade demand and slipped against the Australian, New Zealand and Canadian dollars on rising commodity prices.

Reeling off of yesterday's firmer inflation numbers, the US dollar continued to strengthen today.

US consumer prices were slightly better than expected today which helped to contribute to the overall strength of the US dollar.

Even though the US dollar is stronger ahead of tomorrow’s consumer price report, this does not mean that the market is looking for a strong inflation number.

With the US markets closed for Presidents' Day and many Asian markets closed for the Lunar New Year, trading has been extremely quiet in the foreign exchange market.

The market is getting tired of selling US dollars and has instead opted to take profit on dollar shorts ahead of the three day weekend in the US.

The takeaway message from yesterday’s testimony by Fed Chairman Ben Bernanke is that the central bank needs to see more data before deciding whether or not to raise interest rates.