European Session – Dollar broadly weaker as Yellen testimony comes into focus
February 10, 2014 2:43 pm
The economic calendar was light on Monday, giving currency markets the chance to focus on key risk events coming up later in the week. Investors will particularly be interested in Yellen’s first semi-annual Humphrey-Hawkins testimony in front of the House Financial Services Committee and thus moved their focus away from Friday’s soft payrolls report.
Investors digested the details of the data which showed weather-sensitive jobs like construction in fact did well in the period the data was studying. The unemployment rate in fact fell to 6.6% from 6.7% and this helped alleviate concerns about the below-forecast payrolls number. Market participants expect Yellen will likely signal the Fed’s intention to continue tapering.
The dollar was slightly weaker against the yen and also versus other majors like the euro and the sterling as investors position themselves for the key event tomorrow with Yellen.
The dollar slid 0.13% against the yen to 102.23, down from an early Asian session high of 102.63. The yen’s rally was supported by a slight demand for safe havens despite weak Japanese fundamentals showing a disappointing confidence survey and a record current account deficit.
The euro benefited from the softer dollar, rising 0.04% to 1.3632. The pair remains well above the 1.36 handle, also supported by last Thursday’s inaction by the European Central Bank. The ECB took on a wait‐and‐see approach following a series of weak Eurozone data recently, particularly with regards to inflation.
The euro was little affected by some industrial production data released today from France and Italy showing declines in both countries. French IP fell 0.3% in December after climbing a revised 1.2% the previous month, while Italy’s IP dipped 0.9% after increasing 0.3% in November.
Sterling was choppy against the dollar today, first falling to a low of 1.6382 before ending the session at 1.6408, little changed during the session. Markets will now look to Wednesday’s Bank of England quarterly inflation report. There is some speculation that BOE Governor Mark Carney will signal that interest rates will stay lower for longer and that he might change the Bank’s current forward guidance policy.
The US session is expected to be relatively quiet in the absence of key US economic data releases today.
The economic calendar was light on Monday, giving currency markets the chance to focus on key risk events coming up later in the week. Investors will particularly be interested in Yellen’s first semi-annual Humphrey-Hawkins testimony in front of the House Financial Services Committee and thus moved their focus away from Friday’s soft payrolls report.
Investors digested the details of the data which showed weather-sensitive jobs like construction in fact did well in the period the data was studying. The unemployment rate in fact fell to 6.6% from 6.7% and this helped alleviate concerns about the below-forecast payrolls number. Market participants expect Yellen will likely signal the Fed’s intention to continue tapering.
The dollar was slightly weaker against the yen and also versus other majors like the euro and the sterling as investors position themselves for the key event tomorrow with Yellen.
The dollar slid 0.13% against the yen to 102.23, down from an early Asian session high of 102.63. The yen’s rally was supported by a slight demand for safe havens despite weak Japanese fundamentals showing a disappointing confidence survey and a record current account deficit.
The euro benefited from the softer dollar, rising 0.04% to 1.3632. The pair remains well above the 1.36 handle, also supported by last Thursday’s inaction by the European Central Bank. The ECB took on a wait‐and‐see approach following a series of weak Eurozone data recently, particularly with regards to inflation.
The euro was little affected by some industrial production data released today from France and Italy showing declines in both countries. French IP fell 0.3% in December after climbing a revised 1.2% the previous month, while Italy’s IP dipped 0.9% after increasing 0.3% in November.
Sterling was choppy against the dollar today, first falling to a low of 1.6382 before ending the session at 1.6408, little changed during the session. Markets will now look to Wednesday’s Bank of England quarterly inflation report. There is some speculation that BOE Governor Mark Carney will signal that interest rates will stay lower for longer and that he might change the Bank’s current forward guidance policy.
The US session is expected to be relatively quiet in the absence of key US economic data releases today.
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