FOMC minutes and US CPI data due later in the week to set direction for USD

FOMC minutes and CPI inflation data due Friday will be the two most market moving events of the week. Expectations are for the overall tone of January's minutes to be broadly balanced, highlighting the Fed's constructive outlook for growth and inflation and the continued tightening bias.

Slump in retail energy costs are likely to pressure Jan US headline CPI. US CPI likely to slip a further 0.1% in Jan, marking its second consecutive monthly decline. However, favourable base effects should push annual inflation higher to 1.2% from 0.7% last month.