Dollar weakens after Yellen’s Dovish Testimony

Daily Update - 13th June 2017

Yesterday’s Focus

• GBP Claimant Count Change, ILO Unemployment Rate
• EU Industrial Production
• BOC Monetary Policy Report, Interest Rate Decision, Rate Statement & Press Conference
• US Fed Yellen Testifies

Yesterday’s Explained

Yesterday’s data specifically UK jobs solid Claimants count change, jobless rate beat expectations. All of this suggests that a 2017 rate hike from the Bank of England still looks unlikely, particularly in light of the dovish comments from Deputy Governor Broadbent yesterday. We continue to view the overall hawkish shift from the BoE as an effort to get markets entertaining the possibility of more imminent policy tightening, rather than an explicit near-term rate hike signal.” On the other hand, the Bank of Canada raised its benchmark interest rate as expected to 0.75% which was the central bank’s first move upward in the cost of borrowing in seven years.  The increase in the fund’s rate was widely expected, given recent speeches from members of the committee.

On Wednesday, U.S. Federal Reserve Chair Janet Yellen testified before the Senate Banking Committee on inflation, the Fed balance sheet and interest rates. While most Fed officials believe the current muted inflation figures are probably transitory, Yellen sparked a few concerns when she expressed concerns about inflation and hinted that perhaps it may not be transitory factors pressuring inflation.

Today’s Focus

• EU Consumer Price Index
• US Initial Jobless Claims, Fed’s Yellen Testifies, Producer Price Index

Today’s Market

Today’s focus now shifts towards the German final CPI release due out shortly ahead of the European open, while US PPI and jobless claims hold more significance today, in absence of first-tier macro news from the Euroland. Also, a bevy of Fed speakers are lined up later today, including the Yellen’s testimony before the Senate.