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The Greenback saw substantial growth last week versus a basket of it currency rivals, most notably against the Euro. The USD gained nearly 500 pips versus its cross-Atlantic counterpart, as the oft-traded EUR/USD pair saw its biggest rise in 3 years. Forex Investor confidence in the greenback grew as the week progressed as US officials continually pushed a hawkish stance regarding monetary policy, as well as shooting down talk of the troubles within the US economy. Dollar bullishness escalated on Thursday after Retails Sales saw a larger than expected rise, at 1.2% for the month of May. Momentum carried the dollar into the weekend despite Friday’s release of the Preliminary Michigan Statement. The report which measures consumer confidence showed that American consumer confidence dropped to nearly 30 year lows. But with a sharp rise in US inflation, a rise which will likely lead to an interest rate hike, as well as troubling news following the Irish vote of the EU Lisbon Treaty, the USD finished last week on a positive note.

As we look toward this week, investors look primed to continue to see a bullish dollar. The meeting of the G-8 leaders over the weekend, did little to veer the USD off of its latest path, even as foreign exchange was noticeably absent from talks. Much of the speculation surrounding the direction of the USD this week, is whether or not the talk of rising inflation in the US will curb sub-prime credit worries that have haunted the US economy and its trusty dollar. With a relatively light week of US news on tap, it is very possible that the bullish trend, all be it at a slower speed will continue. This week US news will be highlighted by Housing Starts, PPI, Industrial Production, Unemployment Claims and the Philadelphia Fed Manufacturing Index. Results are expected to mixed, and with the addition of key speeches by Federal Reserve officials Ben Bernanke and Donald Kohn, who will both likely defend the new hawkish US monetary stance, it could prove to be another significant week for the Greenback.

Today the US economy will provide some significant market making news as we expect the release of the Empire State Business Conditions Index (12:30 GMT), TIC Net Long-term Transactions (13:00 GMT) and to finish up the day a speech by Fed Chairman Ben Bernanke. Bernanke will address the Senate Finance Committee Health Reform Summit, where he is scheduled to discuss HealthCare reform, however with the current situation of the dollar, expect Bernanke to push the already bullish currency further.

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Yesterday the greenback had a volatile trading session against its major currency rivals. It underwent contrasting trends vs. the EUR and the GBP and was bullish vs. the JPY. The main news from the US economy revolved around the Consumer Price Indices. The Consumer Price Index was released at 0.2%, a little bit lower than last month’s 0.3% mark. The Core Consumer Price Index was also slightly lower than last month’s 0.2% mark as it came in at 0.1% for April. The biggest repercussion from the reports is that the Fed can now cut rates once again if needed, rather than worry about rising inflationary trends. This very understanding might be what reversed the USD bullish trend into a bearish one.

Today, an extremely intensive news day can be expected for the US economy. First off on the day will be the Empire State Business Conditions Index. The index measures the general business conditions of manufacturers in New York State. Although the survey is limited to New York only, it’s highly important as the New York Federal Reserve report serves as a precursor for national manufacturing numbers. Later on, the Treasury International Capital (TIC) Net Long-Term Transactions will be published. Analysts forecast it to release at 63.6B, well below last month’s 72.5B mark. Such a descent should have negative effect on the USD. At 13:30 (GMT) Fed Chairman Bernanke will deliver a speech in Chicago on Risk Management in Banking Organizations. As always, Bernanke’s speeches are very intriguing, as clues regarding interest rate changes might be scattered throughout. Considering that analysts predict an interest rate cut to be imminent, this particular speech could be vital. At 14:00 (GMT) The Philadelphia Fed Manufacturing Index will be published. Just like the New York Index, its importance derives from the fact that it’s released weeks before other major reports on manufacturing.

Today will be a fascinating day for traders, yet it obligates them to stay fully alert. For today, trading the USD could create significant profits as high volatility is expected throughout most of the day.

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