Fed speakers in the spotlight
New York Fed President Dudley speaks today at 17:00 GMT. The speech is on lessons for the US from Japan’s experience with monetary policy at the zero bound, but markets will be watching for any indication of his views on tapering of QE purchases. Overnight, Chicago Fed President Evans has tried to resist talk of tapering and that he needs to see a few more months of employment data before considering it. Fed Dudley is seen as a core member of the FOMC whose views are likely in sync with Chairman Bernanke, but he has not spoken on the economy publicly since April. Any signal that he is amenable to considering tapering of asset purchases soon would likely see USD regain some upside momentum into Chairman Bernanke’s testimony on Wednesday. Bearish USD is a core view for many market participants and it will likely take an accumulation of dovish Fed commentary and weaker US data to swing momentum back against the dollar. St. Louis Fed President Bullard (a voter this year) also speaks today, at 15:30 GMT. As of April, Bullard has also signalled he would need to see more data before considering tapering, but has a history of being more ambivalent in his support for QE in the past.
Click here to read the full report: FX Daily
BNP Paribas