USD Rallies Sharply

The greenback received a boost across the board at the start of the week, edging up to 1.3757 against the euro and 1.6245 versus the pound. Prompting the currency’s strength were comments from Russian Finance Minister Kudrin, in which he expressed confidence in the dollar as the global reserve currency of choice and that it would be premature to discuss an alternative. Recall several weeks ago, the dollar came under pressure following a series of comments from both Russian and Chinese government officials calling for a new global currency to replace the greenback given the deteriorating fiscal position.US equity bourses posted steep losses, with the Dow Jones, Nasdaq and S&P 500 plunging by well over 2%. The economic calendar was largely negative today, with the June NY Fed manufacturing index deteriorating by more than expected to -9.41 versus May at -4.55. The April overall net capital flows revealed a net outflow of $53.2 billion, versus an inflow of $23.2 billion in the month prior. The June NAHB housing market survey missed estimates for an improvement to 17, instead dipping to 15 from 16 in May.Key data slated for release in the Tuesday session include May PPI, building permits, housing starts, and industrial production. The headline producer price index in May is seen edging up to 0.4%, from 0.3% a month earlier and remain unchanged from the previous year at -3.7%. Core PPI is estimated to hold steady at 0.1% m/m and 3.2% y/y. Traders have continued to focus on housing reports for signs that the housing market has begun to bottom. The May housing starts are expected to improve to 490k units, compared with 458k units a month earlier while building permits are forecasted to edge up to 500k units from 498k units previously.. Meanwhile, May industrial production is seen holding steady from the previous month, posting a 0.5% decline.