USD finds support on Yellen comments

The USD Index, a measure of the strength of the USD against a basket of global currencies, found strong support yesterday as we saw the dollar relish hawkish comments by FED chairman Yellen. Yellen stated that the FED would keep an eye on market conditions and is ready to commit to further tightening when appropriate. She went a step further, reassuring USD buyers, stating that to not act would cause more harm than good and that she sees a few rate hikes in lien for 2017. Markets will remain sensitive to US data, buying the USD on good news and cautiously selling on bad news.

 

19/01 13:30 US Building Permits USDCHF

 

Bank of Canada sobers markets

The Bank of Canada (BOC) kept rates on hold yesterday but disappointed markets by striking a negative tone as Governor Poloz stated that the BOC sees falling inflation in the near future which in turn allows for the possibility of further rate cuts in the future. The CAD sold off aggressively as we saw the USDCAD lose just under 200 pips after the announcement. Today’s data out of Canada will be of interest to traders who will be hoping for better than expected prints as they look for reasons to buy the CAD. However, worse than expected data will see yesterday’s move built on as investors continue to sell the CAD.

 

19/01 13:30 CAD Manufacturing Sales m/m USDCAD

 

EUR`s fate to be decided today

The EUR proved resilient this year so far and has pulled off of its worse levels in 14 years against the USD, to trade at 1.0650. Today sees the European Central Bank (ECB) release the Minimum Bid Rate and a press conference. The Rates are largely expected to remain unchanged and thus the focus will be on the press conference which investors will scrutinize as they look to understand the ECB`s views of the current and future outlook of the economy and thus monetary policy in the EU. A more positive tone will see the EUR enjoy fresh buying as it moves higher while a negative tone will result in a sell off of the EUR as bears look to recapture this year’s lows.

 

19/01 12:45 EU ECB Press Conference EURUSD