Dollar hangs near the $1.31 levels as markets keenly await the release of inflation numbers

The dollar remained mired near it's weekly low of $1.31, as traders seem keen to test this level time and again.
Though with the release of the PPI numbers the USD did receive a temporary relief towards the 1.3012 levels of Friday but it soon lost its strength to close the week around 1.3070 levels. The core PPI (producers price index) shot up to 0.8 percent suggesting that Fed could be more restrictive in its stand and could raise rates more aggressively than previously expected.
The markets will look for similar confirmation from the CPI numbers and the minutes of the Fed’s February meeting scheduled for release this week. Also on the radar this week is the preliminary Q4 GDP numbers, Germany’s IFO figures and the traders will also look towards President Bush’s visit to Europe where he hopes to mend ties.
Yen lost ground last week as it technically entered yet another recession with two consecutive quarters of slowdown but with the Japanese equities fairing well on the back of foreign flows would support the home currency against any fall beyond 106 levels.
Signs of a possible rate hike by the Bank of England in the next couple of meets and cable’s ability to breach the 1.89 mark will help support the currency.
US markets will remain closed on Monday in observance of the President’s day.