In a speech addressed to a business group in Rhode Island, Federal Reserve Chair, Janet Yellen, explained her increased expectation about the economic data, as well as the intention to start raising rates this year. The dollar had prevailed on all fronts together with the treasury yields. Before this, the market warmed up when the CPI was published in line with expectations at 0.1%, while the Core CPI marked an advance of 0.3%. This news represented what market participants needed to hear in order to trust a possible hawkish speech that eventually was delivered.
The euro swung below 1.1000 against the US dollar for the first time since April. Even if the German Final GDP published at 0.3% gave a boost to the euro, the European single currency feels the pressure coming from the situation in Greece. Its interior minister publicly acknowledged on Sunday that Greece will be unable to make its debt payment for the IMF next month if it doesn’t achieve a deal with the European creditors. Unfortunately, the scenario of bankruptcy seems to represent the main hypothesis that generate all the rescue plans for the Greek state. EURUSD has recently broken the 1.1000 support level as the descending tendency resumed.
The ECB’s President Mario Draghi is trying again to appeal to the European states as a single body while urging the Euro zone countries to unite in the task of reforming the economic block. The QE program has still to show its full effect, but without the help of local governments the Euro zone will be unable to mark an acceleration of economic growth.
The oil quotations recorded adjustments on Friday. After the release of the American inventories proved the curbed offer, the increased GDP in Japan and Germany encouraged the prospects on demand, thus favoring the price appreciation. The Friday session brought corrections as market participants rushed to close positions before an extended weekend. The positive bias could be sustained further as is being powered by the demand in Asia and the United States.
The past 2 weeks brought devaluations for the Loonie (the Canadian dollar). The focus has been put on the data on Friday with the Core Retail Sales falling to 0.5% and the CPI being reported below expectations to -0.1%. All this data correlated with the rising US dollar and the depreciated oil quotations risk to bring further positive developments for the USDCAD currency pair.
The activity may be weak today as the UK market is closed for the Spring Bank Holiday, the US market is closed for the Memorial Day and the European centers (Germany and Switzerland) are celebrating the Whit Monday holiday.
