As we begin the second week of the New Year, the greenback will look to curb what has continued to be a weakening position against most of its major counterparts. Amidst a host of negative economic figures over the last few weeks, there is growing speculation that last years Federal interest rate cuts are sure to see the light of day once again. As the Federal Reserve managed to avoid recession upon the completion of 2007, the economic forecast in the US stays relatively grim.

Friday saw the release of a set of important economic indicators from the US, most of which came back lower than initially weak expectations. This was highlighted by Non-Farm Payrolls dropping to 18K, far off the expected rate of 70K, which was already in itself, highly disappointing.

Political turmoil throughout the global village has not helped either. The political unrest following Pakistan directly affected the dollar and continues to do so, along with the escalating situation in Kenya.

The greenback continues to drop against its most staunch rival, the Euro, as it broke the 1.47 barrier and continues to make its way toward 1.50. As problems within the various American stock exchanges continue, other more volatile currency pairs are also seeing gains against the greenback. The Dow recorded its worst week of trading in nearly 100 years, as it was continually hit with bad economic data. The unemployment rate also took saw a slight bump hitting 5.0%, up from its previous figure of 4.7%.

As we look ahead toward Presidential primaries, the US economy and in turn the dollar, will be the focus of tremendous scrutiny if it cannot recover from the failing credit and housing markets.

A Thursday speech by Fed Chair Bernanke will precede Friday’s release of the US Trade Balance, as we should have some indication by then about the timetable being used by the Fed regarding interest rate cuts. Tomorrow we will expect to see negative Pending Home Sales numbers as we enter Monday with no important economic events on tap.