– US Dollar gains as markets position for hawkish Yellen speech
– Eurozone PMI, German IFO data offers post-Brexit growth cues
– Intra-week US news-flow unlikely to stoke strong follow-through
The US Dollar traded broadly higher against its major counterparts on building FOMC rate hike speculation ahead of a much-anticipated Janet Yellen speech on Friday. Investors appear to expect a hawkish posture after San Francisco Fed President John Williams – a close confidant of the Fed Chair – conspicuously walked back dovish sentiments after just 48 hours to deliver a strongly hawkish message. The reversal appeared to hint that the central bank was closing ranks behind a single message favoring the resumption of stimulus withdrawal.
In the interim, Augusts’ Eurozone PMI data (Tuesday) and Germany’s IFO business confidence gauge (Thursday) will continue to inform investors about the extent of negative knock-on effects on regional growth on the back of uncertainty following the UK “Brexit” referendum. A handful of US releases including Durable Goods Orders and Home Sales figures are also on tap. The outcomes seem unlikely to generate lasting follow-through however, with traders probably unwilling to commit to a strong directional bias before Yellen’s remarks cross the wires.
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