Today’s focus will be with Fed Chair Yellen’s testimony to the Senate Banking Committee in Washington. This happens every six months and is a key element of the Fed’s accountability to the US Administration. The dollar will be looking closely for further clarification of when the Fed may start tightening rates, having moved their forward guidance language from referencing “considerable period” to them being “patient”. But the Fed has struggled with such guidance and Yellen in particular, namely at one of her first press conferences back in March of last year, when she was too specific with regards to timing and markets sold off. The bottom line is that forward guidance has had its day and the Fed will be best placed to keep something back to allow markets to make their own judgement. The other factor is that most of the data has come in weaker than expected (bar labour market) in recent weeks and markets will also be looking for any changes in emphasis on this front. The dollar will be volatile and for choice, lower on the back of a lack of clarity on the timing of the first rate move. Also note that Bank of England Governor Mark Carney speaks this morning in from of Parliamentary committee. Sterling continues to perform well, the strongest performer on the majors so far this week and finds itself around the 1.5450 area at the European open.
Naturally, the story is not over for Greece. The measures they have put together over the past few days will be put in front of Eurozone Finance Ministers today. Details of the reform measures are starting to filter through and seem on the vague side, so it’s appears that it is not going to be plain sailing. If there is no agreement, then we’re likely to see further wobbles in the single currency and especially in Greek bonds, because time is clearly running out. Even if accepted, this only funds Greece for the coming for months, so further negotiations are going to start once again.