Focus on USD
The focus today is on Fed Chair Yellen’s first Semiannual Monetary Policy Report to Congress. She is expected to retain her predecessor’s policies and state that further gradual tapering is likely, although there is no preset course and the Fed will adjust as needed. Last week’s U.S. employment report was mixed we continue to expect the Fed to taper at a $10 billion per meeting pace and conclude its purchase program in October. Yellen testifies before the House Financial Services Committee today as investors weigh the pace of stimulus reductions against data this week that may show retail sales in the world’s largest economy stalled while jobless claims declined.
Yesterday saw the pound climb to its strongest level in a week against the dollar after data released showed U.K. retail sales growth accelerated in January, adding to evidence the recovery is gaining momentum. However, GBP was little changed against the Euro and if anything was a bit down. The British Retail Consortium said like-for-like retail sales jumped 3.9 percent from a year earlier after increasing 0.4 percent in December. Although it is always good to see an increase, this was not as high as had been expected. The Bank of England is scheduled to release new forecasts for economic growth and consumer prices in its quarterly Inflation Report tomorrow.
Yesterday, also saw the AUD reach a 4 week high due to a rise in home prices and increase in business sentiment. House prices in Australia surged 9.3 percent in the final quarter of 2013 from a year earlier, the biggest increase in more than three years.