Yellen’s Cautious Tone Lifts Aussie And Kiwi Dollars

The Aussie and Kiwi Dollars benefited from the greenback’s slide after yesterday’s testimony by the head of the Federal Reserve suggested some caution ahead in terms of interest rates. Though Janet Yellen was cautiously optimistic that inflation would be picking up in the near term, the release this Friday of personal inflation date (CPI) will go a long way to confirming or dismissing the Fed’s official posturing which is less hawkish than some FX traders would like. Currently, analysts are expecting CPI to edge to 0.2% in June on a month-over-month basis, while on an annual basis expectations are for a fall to 1.7% from 1.9%.

As reported at 11:22 am (BST) in London, the AUD/USD pair was trading at $0.7739, a gain of 0.81%; the pair had earlier hit a peak of $0.77407 while the session low stands at $0.76740. The NZD/USD was up 1.07%, trading at $0.7339; the pair has ranged from a session trough of $0.72467 to a peak of $0.73429.

US Fundamentals in View

Also ahead for the US Dollar, in terms of fundamental data, is Friday’s release of retail sales figures. Analysts are forecasting that retail sales will grow 0.1% in June, up from a dismal -0.3% in May. Retail sales is a key piece of information for the Federal Reserve to help establish monetary policy given that the US economy is driven primarily by American consumers. Producer price inflation figures will also be released later today, as well as new and continuing jobless claims. Janet Yellen will also be concluding her testimony before the US Congress today.