The dollar was given a boost yesterday after Fed voting member Jerome Powell spoke of his preference for a September rate hike by the FOMC and even two hikes this year. This hawkish stance saw the dollar index spike, knocking EURUSD which dipped back below 1.1200 although the euro has fought back overnight and is trading at 1.1210 this morning. The dollar will be tested today with the release of Q1 GDP data which is expected to be revised upwards from previous readings, with market expectations of an improvement from -0.7% to -0.2% and this comes with an ever improving picture for the US housing market, so it is little wonder that Powell was talking of 2015 interest rate hikes in the plural. Also on the data front this morning we see German Ifo data which could affect the euro.
It is not possible to write this note without a mention on Greece where negotiations are ongoing and the market remains optimistic of a deal this week. The real problem any deal faces however is ratification by both the Greek and German parliaments, in particular Greece since the Syriza government is fiercely anti-austerity and any rejection of the deal could force fresh elections causing considerable market turmoil.