Fed speakers remain in the spotlight ahead of Bernanke’s testimony on Wednesday
New York Fed President Dudley speaks today at 13:00 EST. 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. These comments follow Chicago Fed President Evans Monday speech which we interpret as remaining dovish with Evans indicating a need to see a few more months of employment data before considering tapering. 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 would be considered a shift in his view and would likely see USD regain some upside momentum into Chairman Bernanke’s testimony on Wednesday. Bullish 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 10:30 EST. As of April, Bullard has also signalled he would need to see more data before considering tapering, but has a history of being more mixed in his support for QE in the past.
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BNP Paribas