Markets await Yellen’s testimony

• GBP MPC Member Cunliffe Speaks
• GBP Trade Balance: -9.9B
• USD JOLTS Job Openings: 5.61M
• AUD Westpac Consumer Sentiment: 4.2%

There were no key distractions yesterday as the markets await Yellen’s testimony today. Signs continued to show that the global economy is struggling as yesterday was another day of risk aversion as the Yen strengthened substantially against the Dollar and Euro. The outlook for the global economy remains too uncertain, with the growth dynamics in the US also moderating. Amongst this, the current QE programme implemented by the ECB does not look sufficient enough to act as a counter weight to these external forces. 

The economic calendar was very light yesterday, however we did have the release of the UK’s Trade Balance. The Trade Balance, which measures the difference between the UK’s imports and exports posted a better than expected -9.9B yesterday morning.

• GBP Manufacturing Production m/m
• USD Fed Chair Yellen Testifies
• USD Crude Oil Inventories

After the BoE meeting last week and the inflation report which was on the dovish side, today sees the release of Manufacturing and Industrial monthly Production figures. This will be watched to gauge if there are still signs of a slowdown being felt at the start of 2016 for the UK. Focus will again turn to the US, as Fed Chair Janet Yellen testifies on the Semi-annual monetary policy before the Senate Banking Committee, in Washington. This will be watched to see whether there are indicators on further rate increases for this year.