<\/a>Financials<\/u> –
\nFed Chair Yellen gave a speech in SF late yesterday and her comments were deemed as slightly hawkish.\u00a0 The dollar firmed modestly following her remarks and Fed Funds dropped slightly.\u00a0 The key comment off the newswires was she and \u201cmost colleagues expect \u2018a few\u2019 rate hikes\u201d this year.\u00a0 This begs the question, how much is \u2018a few\u2019?\u00a0 As noted here several times FF futures have been essentially pricing in two rate hikes for 2017.\u00a0 I have noted that I believe that to be an underestimation of the Fed\u2019s desire to hike rates.\u00a0 It\u2019ll be interesting to watch further Fed commentary in the weeks ahead.\u00a0 This could provide some support to the dollar if they remain hawkish.\u00a0 It might also be interesting to watch FF futures as rate hike expectations could become repriced.\u00a0 As noted yesterday the market is currently betting the under vs. the Fed\u2019s dot plots.\u00a0 It\u2019ll be interesting to see if sentiment changes.\u00a0 March might be a \u201ctarget\u201d for the next rate hike according to some observers.<\/p>\n
Another big mover in FX yesterday was the CD following dovish commentary from the BOC.\u00a0 BOC governor Poloz said that a rate cut \u201cremains on the table if downside risks materialize\u201d.\u00a0 The CD has been a beneficiary of recent dollar weakness and recently reached the top side of its recent trading range. With a dovish BOC and a potentially hawkish Fed, perhaps a visit to the low end of the recent trading range is in the cards (~74.00).<\/p>\n
The focus today will remain on central banks and FX as the ECB will announce its updated monetary policy decision this morning.\u00a0 Expectations call for no change in rates or the asset purchase program, but all eyes will be on ECB President Draghi\u2019s press conference for clues going forward.\u00a0 Eurozone inflation has picked up somewhat in recent months so it\u2019ll be interesting to see how much his comments focus on this.\u00a0 It\u2019ll also be interesting to see if he brings up the difficulties in implementing the new allowance for purchasing bonds yielding under the deposit rate and whether they are considering changing their rules on owning a certain percentage of particular issues.<\/p>\n
DISCLAIMER<\/u><\/strong>:<\/strong> Financials – Fed Chair Yellen gave a speech in SF late yesterday and her comments were deemed as slightly hawkish.\u00a0 The dollar firmed modestly following her remarks and Fed Funds dropped slightly.\u00a0 The key comment off the newswires was she and \u201cmost colleagues expect \u2018a few\u2019 rate hikes\u201d this year.\u00a0 This begs the question, how […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[13],"tags":[],"yoast_head":"\n
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