Markets quiet in anticipation of Yellen’s speech today

Markets quiet in anticipation of Yellen’s speech today

Set to cap a week that has seen steady trading as markets have held back in anticipation of today, the primary market focus will be on the Fed Chair, Janet Yellen, giving her highly anticipated speech at 3PM. Given the lack of consensus we’ve seen within the FOMC recently, markets will most likely be looking at Yellen to provide some kind of guidance or insight into the likelihood of the Fed’s potential policy tightening before the end of the year.

Furthermore, markets have priced in a 25 base point hike but not until the first half of next year however. Therefore, any signals that suggest policy tightening before then could help strengthen the dollar and give it a boost. On the flip side, a cautious Yellen could lead to dollar pressure pointing towards a negative outlook as we head into the weekend.

Markets trade in narrow ranges

Yesterday we were faced with no major reaction to the market data released. We saw German IFO data which came out lower than both the previous and forecasted levels (at a reading of 106.2), followed by US Durable Goods (1.1% higher than expected) and Unemployment Claims (1K below previous and 4K below forecast). Furthermore, this led to the main FX pairs spending the day trading in narrow ranges, fairly close to their opening levels.

Data to come

In the lead up to this key event, we will also be seeing Q2 GDP data for the UK at 9:30AM, followed by US Q2 GDP data at 1:30PM. This is fairly high ticket data, but wouldn’t be surprised if we didn’t see much movement due to the anticipation surrounding Yellen’s 3PM speech.