Dollar Steady on Hawkish Fed

Morning Report: 07.00 London

• This morning, the US dollar is steady after solid gains yesterday. These gains came on the back of a potentially hawkish tone from Fed chairperson Yellen. Previously expectations had been mountain over a much later rate hike, but those expectations are now coming closer to previous expectations.

• By contrast, the prospect of an earlier rate hike has spooked markets with the S&P 500 dropping off record levels.

                          
   
• The USD/JPY saw the biggest gains yesterday as the strong dollar met a weakening yen. There has been follow on buying in other yen pairs such as the EUR/JPY and GBP/JPY.
 
                          

• The euro is recovering somewhat after yesterday’s losses.

                            
              
Coming up today:

• Today’s main item of note is the Canadian BOC rate statement from 15.00.

Trade Idea:

• All the yen pairs are travelling well, but the GBP/JPY is showing particular promise away from the euro’s Greek problems.

                           
                                                
A good way to play this is a HIGHER trade on the GBP/JPY predicting that the GBP/JPY will close above 191.00 in 7 days time for a potential return of 181%.

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