The US dollar tossed and turned during Fed head Yellen’s speech as she admitted that the central bank may have overestimated some of the figures on employment and inflation. She repeated that the dip in inflation this year has been puzzling for the Fed and reiterated that they would adjust policy to data as needed. Durable goods orders and pending home sales reports are lined up next.
The euro continued to slide to its peers as traders focused on the outcome of the German elections, which spurred coalition talks and the rise of the AfD party. Political uncertainty could continue to weigh on the shared currency in the next few days but the focus could return to fundamentals if data comes in strong. However, there are no major reports on today’s docket.
The pound is showing signs of weakness as there have been no reports to prop it any higher. Brexit remains a thorn on the pound’s side and the upcoming meeting between May and Tusk should determine where the currency might be headed next. CBI realized sales data is due today and a rise from -10 to +8 is expected.
The franc continued its mixed run but managed to catch a bid on rising risk-off flows. There have been no reports from Switzerland yesterday while today has the UBS consumption indicator and the Credit Suisse Economic Expectations figure. Any improvements from their earlier readings could lend more support for the franc since the SNB has sounded less worried about currency strength recently.
The yen was able to take advantage of the pickup in risk aversion even after PM Abe called for snap elections. North Korea’s foreign minister claimed that Trump has declared war and the clash of words continues between the two nations, keeping traders on edge. There are no reports due from Japan today, so market sentiment could be the main driver.
Commodity Currencies (AUD, NZD, CAD)
The comdolls had a mixed run as the Aussie and Kiwi weakened while the Loonie tried to hold on to its current levels. Canada’s finance minister mentioned that they aren’t too worried about CAD strength at the moment. Still, risk aversion is weighing on these higher-yielding currencies, especially since the situation with North Korea shows no signs of abating anytime soon. Crude oil inventories and the RBNZ decision are due next.