Yellen speech in Massachusetts

Yesterday’s markets

27th May 2016

  • GBP Second Estimate GDP q/q: 0.4%
  • GBP Prelim Business Investment q/q: -0.5%
  • USD FOMC Member Bullard Speaks
  • USD Core Durable Goods Orders m/m: 0.4%
  • USD Unemployment Claims: 268K
  • USD Durable Goods Orders m/m: 3.4%
  • AUD RBA Assist Gov Debelle Speaks
  • USD Pending Home Sales m/m: 5.1%
  • USD FOMC Member Powell Speaks
  • AUD RBA Assist Gov Debelle Speaks
  • ALL G7 Meetings

Sterling’s one month gauge of volatility versus the Dollar bounced back yesterday to its highest level since 2010. This measure reflects trading activity in the days leading up to the results of Britain’s June 23rd vote on whether to leave the European Union. The gauge of potential price swings exceeded it’s three month measure by the most since the 2008 financial crisis. This demonstrates that market concerns surrounding the Pound are extremely high as the EU Referendum approaches. 

The US released a raft of high tier data yesterday afternoon. Firstly, Durable Goods Orders posted at 3.4% against a forecast of 0.5%. This bullish reading shows that activity in the secondary sector is picking up, boosting the US economy. Simultaneously, labour market data released from the States also exceeded market forecasts. Unemployment claims registered a reading of 268k, showing the number of unemployed people who claimed last week fell by 10k. Finally, Pending Home Sales from the world’s largest economy the US, posted a bullish figure of 5.1%, its best reading since June 2014. This raft of improved figures gave the Greenback a boost yesterday afternoon.

Today’s markets

26th May 2016

  • USD Prelim GDP q/q
  • USD Revised UoM Consumer Sentiment
  • USD Fed Chair Yellen Speaks

Today, the GDP figure will again dominate the market’s focus, as the US reveal the first insight into how the economy performed in the first quarter of 2016. If the expected growth of 0.8% is met, Dollar buyers will definitely be out in force. This would show further evidence for the Federal Reserve to possibly raise interest rates in June as outlined in last week’s minutes. Federal Reserve Chair, Janet Yellen is speaking later today in Massachusetts where markets will look for any insight or indication as to when the Fed are likely to act.