Despite a very thin calendar, the market was relatively volatile yesterday, and in favor of the USD. Catalyst for the strength in the Dollar was the evident support from FOMC members in favor for a rate hike sooner than the market expected. On the data front, German ZEW economic sentiment will be the main focus in European session. Germany will also release GDP final. US will only release new home sales.

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Currencies: USD has strengthened overnight after comments from FED officials supporting a possible rate hike in June or July. USDJPY traded as low as 109.10 from 110 yesterday. EURUSD has remained quiet after falling from 1.1240 to 1.1185 yesterday. GBPUSD is the best performer versus USD, supported from speculation that UK will not exit EU. Commodity currencies were the weakest overnight as AUDUSD dropped from 0.7230 to 0.7180 while NZD dropped from 0.6765 to 0.6715.
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Oil and Gold: Gold fell for the 5th consecutive day, which is the longest losing streak since November. The yellow metal fell to $1243 yesterday where strong support helped it bounce to $1250 before closing the day at $1245. A break of $1243 can open the way to $1225. Crude oil prices slipped too for the 4th day in a row however the drop has not caused a lot of follow through in selling volume and price is still relatively high.
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Stocks: The theme of the last 2 days has been risk aversion. Globally stock indices seem to be taking a cautious stance ahead of Janet Yellen’s speech later this week. Evident is the fact that Asian bourses are trading close to 10 week lows. The recent string of comments in recent weeks by Federal Reserve officials and minutes of the last Fed meeting have put a possible rate hike firmly on the table for June or July, reviving the dollar but cooling appetite for riskier assets, even if markets are not totally convinced a rate rise will come soon.