US Housing Data and CPI On Focus Today - Will The USD Continue to Build Up Steam?

It has been a relatively hectic day for the greenback, yesterday, as we saw the EUR/USD climb back to 1.4220 just to drop sharply into the 1.4140 zone and than making it back to 1.4190, and all in a relatively short period of time.
Most of that price movement was caused by several important releases from the US market, starting with the Treasury International Capital (TIC) Net Long-Term Transactions. The TIC measures the monthly difference in cross-border foreign and domestic purchases of long-term securities and is a great indicator for international money flows. The TIC release came out way off expectations into -69.3B, with a previous release of 19.5B and expectations for 60.0B. The figure might indicate that the TIC is in a critical point, and we must wait for the next release to understand if this was a one time fall, or a deeper problem in the US money flow.
Following the TIC, we saw the release of the Industrial Production and the Capacity Utilization Rate; both were released inline with expectations, and caused little effect as traders were getting ready for Treasury Secretary Paulson’s Speech.
It seems that despite Paulson’s opinion that the Americans investors will get used to the credit situation and will find inductive solutions which would expand to the US market, the US government and top Treasury officials are together prodding and pushing Wall Street firms and the mortgage industry to come up with solutions - and helping devise some of them as well.
Paulson is becoming more active on other fronts as well. In his speech, he called for new nationwide rules for mortgage lenders, changes in the practices of credit-rating agencies and tougher scrutiny by U.S. banking regulators. He plans to step up pressure on mortgage lenders and mortgage-servicing companies to renegotiate terms for people in danger of defaulting on expensive subprime loans.
As for today, traders are expecting two major releases, the first would be the US CPI (12:30 GMT) with a consensus of 0.2% and a previous figure of -0.1%. Housing starts and building permits will follow, and will probably pull a bit more attention as it involves the struggling housing market. Housing starts is expected to be released at 1.28M and building permits at 1.29M.

Today’s events might shed more light on the USD situation, and add some information to the ongoing speculation around the Fed’s rate hike expectations.