EUR/USD: Markets Await Yellen’s Speech

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On Tuesday, trading on the Euro closed slightly up. Market participants were unable to determine the direction of the currency pair throughout the day’s session. Trading in Europe pushed the Euro up against the dollar to 1.1255. In the US session, it fell to 1.1192 following the dynamics of the EUR/GBP cross. From 1.1192, the exchange rate restored to 1.1213. I’m guessing that this rebound was brought about by the slide on the EUR/GBP cross as well as the surge of the Canadian dollar across the market.

Poloz, governor of the Bank of Canada, announced that the reduction in interest rates imposed in 2015 had now borne fruit. The economy has been given a boost in upwards momentum. Poloz also made it clear that interest rates could be raised sooner than expected. The probability of this happening by the end of the year is around 70%.

Market expectations:

On Wednesday the 14th of June, the EUR/USD pair is trading at 1.1217. Trader attention is now turned towards the FOMC meeting and Janet Yellen’s press conference to follow. During the day, many important data-sets are scheduled to be published in Germany, the UK, the EU and the US.

A rate hike of 0.25% has been factored in by the market. What’s important now is what Yellen will say about the prospects of a third rate hike. I’m not making any predictions on this for now.

Day’s news (GMT+3):

09:00 Germany: CPI (May);

11:30 UK: average earnings (Apr), claimant count change (May), ILO unemployment rate (Apr);

12:00 Eurozone: employment change (Q1), industrial production (Apr);

15:30 USA: CPI (May), CPI core (May), retail sales ex autos (May), retail sales (May);

16:30 UK: Conference Board leading indicators (Apr);

17:00 USA: business inventories (Apr);

17:30 USA: EIA crude oil stocks change (9 June);

21:00 USA: FOMC economic projections, Fed’s monetary policy statement;

21:30 USA: FOMC press conference (Janet Yellen).