USD

The US dollar suffered a sudden selloff in yesterday’s New York trading session, as Fed head Janet Yellen’s testimony forced market participants to push back rate hike expectations. 

She pointed out that the Fed would change its forward guidance to reflect any inclination towards hiking rates and clarified that this isn’t likely to happen in the next couple of policy meetings. She mentioned that they would proceed on a meeting-by-meeting basis and would take their time before tightening. Yellen is set to give another testimony today and would likely renew dollar weakness. US CB consumer confidence also came in weaker than expected while the upcoming release of the new home sales report might show a decline from 481K to 471K. 

EUR 

The euro managed to recover against the dollar but still lost ground to its other forex counterparts, even as EU officials seemed to give the thumbs up to Greece’s list of economic reforms. ECB Governor Draghi didn’t drop any surprises during his latest testimony, although he is set to give another speech today and market participants might pay more attention to his remarks. 

GBP

The pound took advantage of the dollar selloff when the UK Inflation Report hearings echoed the same upbeat sentiment as it had earlier. Officials expressed confidence that the downturn in price pressures would boost consumers’ purchasing power and lead to stronger spending and growth eventually. BBA mortgage approvals data is up for release today and BOE Governor Carney is set to give a speech which might lead to more pound gains. 

JPY

The yen had a mixed performance as it advanced to the European currencies but gave up ground to the comdolls. There have been no major reports released from Japan so far, leaving the yen at the mercy of risk sentiment while traders await top-tier data later on this week. 

Commodity Currencies (AUD, NZD, CAD)

The comdolls surged against the dollar in anticipation of a longer period of low Fed rates, which might keep inflation and global growth supported. Speculations of a milk forecast upgrade from Fonterra and an OPEC oil production cut lifted commodity prices as well. Earlier today, Australia reported a smaller than expected 0.2% quarterly decline in construction work done and a 0.6% increase in its wage price index. Later on, New Zealand visitor arrivals and trade balance figures are due. 

By Kate Curtis from Trader’s Way