Weak FX volumes as traders await Janet Yellen speech

The FX markets have started the week with very low volumes as traders await the words of wisdom from Federal Reserve Chairwomen Janet Yellen’s first testimony. This follows last week’s disappointing NFP data and an ECB President that wasn’t as dovish as many had expected, with an ECB rate cut for March seemingly off the table. I think we have to remember that the Fed Chair will be addressing the Fed’s view as opposed to her own view although the Q&A could be a little more personal. The market will be looking for the Fed’s latest thinking on the recent below-consensus data and the effects the weather has had, EM weakness potential fallout, future forward guidance (inflation targets) and if any of the mentioned could reduce the tapering process. The understanding around the timetable is that a prepared testimony will be released at 1.30pm on the Federal Reserve’s website with her appearance before the House Financial Services committee to begin at 3pm.

The Asian session continued the subdued start to the week. It didn’t help that Tokyo is on holiday, with a slight bias to a risk positive theme ahead of Yellen as some expect her usual dovish signals.

In the UK, retail sales data from the BRC showed the best results in almost three years whilst the AUD got a boost from improving business conditions and confidence data, taking the lifestyle currency onto the 0.90 handle and continuing the short squeeze that started after the RBA removed their easing bias.

EUR/USD

Supports 1.3630-1.3600-1.3550  | Resistance 1.3685-1.3700-1.3740

USD/JPY

Supports 102.00-101.80-101.60 | Resistance 102.45-102.85-103.55

GBP/USD

Supports 1.6380-1.6320-1.6250 | Resistance 1.6450-1.6485-1.6520