Yellen sends clear signal

Dear Traders,

While the British Pound tortured traders with fake-outs and choppy moves, the euro was heading for a test of the 1.13-area. The short recovery in the EUR/USD was still driven by Mario Draghi’s comments, who said on Wednesday that ECB policy makers will wait before discussing on a QE extension. After failing at $ 1.13, dollar bulls took control and drove the pair back below $ 1.12.

The U.S. dollar received support from Federal Reserve Chair Janet Yellen saying that the Fed is on track to raise rates this year. During her speech in Amherst, Massachusetts, she sent a clear signal, that Fed policy makers believe that a rate hike is appropriate this year, followed by a gradual pace of tightening thereafter.

What is important for today?

Revisions to second-quarter U.S. GDP (12:30 GMT), the U.S. PMI reports (13:45 GMT) and the University of Michigan Consumer Sentiment index (14:00 GMT) are the only second-tier data scheduled for release today.

If GDP figures meet the expectations, the impact on the dollar could be limited.

Given the hawkish outlook for the U.S. dollar in the near-term, we are generally looking for further gains in the USD.

Have a nice weekend.

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