The USD Index, a measure of the strength of the USD against a basket of currencies, was sold off yesterday in anticipation of Fed Chair Yellen`s speech which proved sellers right as she struck a fairly dovish tone in which she stated that the need for interest rate hikes remains neutral and that the fed will remain vigilant of economic statistics before gradually increasing interest rates. This is a stark difference from the recent aggressive rhetoric from FED members, with some even calling for at least 3 more hikes this year.
In recent employment data we saw a mix bag of statistics as the NFP disappointed but the unemployment rate dipped to 4.5%, prompting a confusion in markets which ultimately saw the USD gain traction before succumbing to selling pressure yesterday and today. Today’s JOLTS Job Opening figure will add another piece to the puzzle of how the labor market is performing. The figure represents the total number of job openings available in the USA and is regarded as a leading indicator of economic health. If the number beats expectation, the USD will strengthen as traders price in the improving economic conditions which warrant more job postings while a worse than expected release will see the USD continue to slide as markets price in a tightening of the labor market and thus the general economy.
Other important news to watch today comes in the form of the UK CPI which traders will be watching in a bid to understand whether the UK economy is heating up or not. A heating up of the economy usually warrants a rate increase and vice versa if we see the CPI fall too low. A better than expected released will see GBP snapped up in anticipation of improving economic conditions while a lower than expected release will see the GBP sold off in anticipation of an economic slowdown.