Yesterday, much of the focus was on the on FOMC Chairwoman Janet Yellen as she testified before the Senate Banking Committee. Yellen maintained a dovish tone saying that inflation and wage growth remain low, despite an improving job market. She also signaled that a change in direction of the Fed’s language on an interest rate rise does not suggest there is a timetable. Yellen went on to repeat that the Fed pledge to be “patient” on raising the benchmark interest rate, meaning an increase is unlikely for “at least the next couple” of meetings.
The Dollar was not helped by the soft consumer confidence reading that was posted yesterday. The index fell 7.4pts to 96.8, mimicking the decline seen in other confidence indicators. Whilst this is not a dreadful figure, it does highlight that the data is softening.
In Europe, data readings across the region met economists’ consensus. Inflation in the Eurozone fell in line with the forecast as did the second reading of German GDP. On a positive note, Eurozone finance ministers have approved reform proposals submitted by Greece as a condition for extending its bailout by four months. However, the Head of the IMF said they lacked "clear assurances" in key areas. It remains to be seen if this will be signed off.
Overnight, China's manufacturing sector ticked to a four-month high in February but export orders shrank at their fastest rate in 20 months. The survey suggested that manufacturers still faced considerable risks from weak foreign demand and deepening deflationary pressures.
Today we have three key Central Bank heads addressing the markets. ECB President Draghi, Fed Chair Yellen and BoE Governor Carney are all scheduled to speak today. Any comments about current monetary policy will no doubt inject volatility into the market. The only key data for today is UK mortgage approvals, US new home sales and the New Zealand trade balance.