An element of risk off sentiment has knocked the equity markets overnight and is causing headwinds for indices this morning as the US ramps up sanctions against Russia by targeting individual firms. The dollar however is not acting as its usual safe haven as it contemplates its next move having appreciated throughout the week, especially benefitting from Yellen’s two day testimony. The take away from Yellen is that she was less dovish than usual but by no means being any clearer on when we can expect the first hike in Fed funds rate. We know that tapering will end in October but at this rate it’ll be the back end of 2015 before the Fed moves. Between now and then it means more scrutiny than ever will be given to labour market data, including the weekly claims data as well as the monthly nonfarm and ADP figures. Today’s weekly jobless claims are expected to rise slightly to 310k, still below the 3 month average around 315k and a lower number could attract a few more dollar buyers.
Overnight the Aussie has seen a little volatility following some better than expected leading indicators but no real traction made for AUDUSD whereas AUDNZD has seen a more pronounced move higher.
This morning sees inflation data from the Eurozone with the Y on Y figure the key one to watch due to rise to 0.8%. EURUSD has fallen 2.8% since its highs in May and is now well below its 200 day moving average. The 1.3500 level is seen as a major support level with EURUSD trading at 1.3530 at the time of writing.