USD

We saw the dollar pick up slightly last night as Federal
Reserve Chair Janet Yellen said the US economy is poised for growth.

The dollar strengthened as Yellen told the panel that data
shows “solid growth” for the economy in the second quarter, supporting the case
for faster expansion this year.

Yellen was incredibly cautious in her language in regards
to future rate hikes but It is notable that she discussed fiscal policy to more
a degree than she has done.

USD

We saw the dollar pick up slightly last night as Federal
Reserve Chair Janet Yellen said the US economy is poised for growth.

The dollar strengthened as Yellen told the panel that data
shows “solid growth” for the economy in the second quarter, supporting the case
for faster expansion this year.

Yellen was incredibly cautious in her language in regards
to future rate hikes but It is notable that she discussed fiscal policy to more
a degree than she has done.

It was said that work would be needed in regards to
fiscal sustainability and that in the context of riding rates, Congress should
address fiscal policy accordingly.

She also commented that labour market conditions are far
from satisfactory and that inflation persisting below 2% ‘could pose risks’

Despite the US dollar strengthening marginally following
the speech, the longer term downtrend for the US dollar remains intact as the
low interest rates in the US is more than likely to prompt investors to reach
for return in higher yielding currencies.

NZD

The New Zealand dollar declined versus all 16 of its
major peers after Reserve Bank Governor Graeme Wheeler mentioned the central
bank may consider selling the currency if it fails to respond to worsening
fundamentals.

Today

Data from Halifax this morning has shown that house
prices in the UK have fallen by 0.2% for the month of March causing the pound
to lose some ground in early trade.

German industrial production was also disappointing with
output falling by 0.5% in March.

The Bank of England’s interest rate decision and
quantitative easing is anticipated to remain at 0.5% and £375bn today – no surprise
there then, but it would be interesting to see if there is statement made by the
Bank of England with regards to the appreciation of the pound.

Mario Draghi of the European Central Bank will me making
his monthly monetary policy speech this afternoon. In the last two months,
markets have been disappointed with Draghi’s comments – as he continues to
remain on the side lines with regards to the central bank either reducing interest
rates or introducing quantitative easing. So this afternoon could be
interesting should he change from this rhetoric that the central bank will remain
accommodative.

Key Announcements:

12.00pm – GBP – BoE Interest Rate Decision: Expected to
remain at 0.5%.

12.00pm – GBP – BoE Quantitative Easing: Expected to
remain at £375bn.

12.45pm – EUR – ECB Interest Rate Decision: Expected to
remain at 0.25%.

13.30pm – EUR – ECB Monetary Statement.

13.30pm – USD – Fed Reserve Chair Janet Yellen Speech.