Yellen Leaves Everyone Guessing

Daily Update - 27th September

Yesterday’s Market

• GBP Inflation Report Hearings 

• USD New Home Sales Change (MOM) 

Yesterday Explained

The GBP/USD pair ended marginally lower for a second day in-a-row, hit by the lack of progress in Brexit negotiations and broad dollar's strength. There were no big events in the UK to lead the way, beyond headlines indicating that Brexit negotiations stalled, as the EU keeps demanding clarity in multiple issues, including the Brexit bill settlement and citizens' rights, before discussing trade, while UK negotiators aim to move forward  and focus on trade. 

The US economic data released on Tuesday showed new home sales fell short of consensus estimates and came-in at 560K for August. This was mainly due to the devastating impact caused by the Hurricane Harvey and Hurricane Irma. Meanwhile, the Conference Board’s Consumer Confidence Index ticked lower to 119.8 during September, down from previous month's reading of 120.4, but did little to dent prevalent bullish sentiment surrounding the buck. 

Yellen's speech dove deep into monetary but failed to change the maths on a December hike. Her comments were initially reported by Reuters with headlines that tilted dovishly, stressing the uncertainties. A couple minutes later, Bloomberg's main take was Yellen's warning that the Fed should be wary about moving too gradually.

Today's Focus

• USD Durable Goods Orders, Pending Home Sales & 2 FED Speeches

Today's Market

From US, The Durable Goods Orders, released by the US Census Bureau,  measures the cost of orders received by manufacturers for durable goods, which means goods planned to last for three years or more, such as motor vehicles and appliances. As those durable products often involve large investments they are sensitive to the US economic situation. The final figure shows the state of US production activity.

Also from US, The Pending Home Sales released by the National Association of Realtors is a leading indicator of trends of the housing market in the US It captures residential housing contract activity of existing single-family homes. As the housing market is considered as a sensitive factor to the US economy, it generates some volatility for the USD. The Day will end with two speeches from FED presidents Bullard and Brainard.