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By Associated FX Analysis Team

Kantox currency report: dollar recovery halts ahead of Yellen’s testimony

Published February 14, 2017

Federal Reserve Bank

The U.S. dollar is pulling back from fresh 3-week highs reached on Monday, with investors on the look at Yellen’s semi-annual monetary policy report before the senate banking committee later today.

After several weeks of decline, the dollar bounced up last week, buoyed by Trump’s promises of a “phenomenal” tax plan that will be released in the coming weeks and extended gains after the Trump – Abe summit ended up without disagreements in controversial subjects such as currencies or trade barriers.

EUR/USD: 3-week lows at 1.0590. Euro downtrend from early February highs at 1.0830 extended on Monday to a key support area at 1.0590 (Jan 18, 19 lows) where the pair found buyers and returned above 1.0600. At London market opening times, the EUR/USD is trading at 1.0610.

GBP/USD: trading sideways around 1.2500. The pound has remained trading within a narrow range between 1.2440 and 1.2580 for the fifth consecutive day. At London market opening times, the GBP/USD is trading at 1.2535.

USD/JPY: resistance at 114.20. Dollar recovery from last week lows at 111.60 was unable to extend beyond 114.15  on Monday and the pair has pulled back to the mid range of 113.00 ahead of Yellen’s speech. At London market opening times, the USD/JPY is trading at 113.40.

In the Calendar Today

At 09:30 GMT National Statistics will release the UK Consumer Prices Index figures. Pound weakness is expected to drive consumer inflation higher in the coming months, which would add pressure on the BoE to consider monetary tightening. A higher than expected CPI in thus might have a positive impact for the pound.

In the euro area, at 10:00 GMT we will be attentive to the second estimation of the Q4 Gross Domestic Product and the industrial production figures, which are expected to have declined in December. A Sharp decline in industrial output might have a near-term negative impact on the euro.

At 15:00 GMT all eyes will be on Fed’s Yellen’s semi-annual report to the U.S. congress. The bank recently raised the inflation perspectives for this year, and investors will be eager to know how that scenario might influence the Bank’s monetary tightening calendar.

09:30 GMT       UK: Consumer Prices Index (YoY) (Jan)
Prev: 1.6%         Cons: 1.9%         

 10:00 GMT       EU: Industrial Production (MoM) (Dec)
Prev: 1.5%         Cons: -1.5%

10:00 GMT       EU: Gross Domestic Product (YoY) (Q4)
Prev: 1.8%         Cons: 1.8%     

15:00 GMT       Fed: Yellen’s semi-annual report 


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