Fed Chief Yellen testimony the focus

Today's Highlights

Greece are due to present their reforms today

Fed Chief Yellen testimony the focus

FX Market Overview

After the fun and games of the last few days yesterday was a fairly quiet trading session as traders digested the news that Greece and the Eurogroup had reached an agreement to the terms of an extension of the current bailout. The Greeks are due to present their economic reforms today and these need to be ratified before an approval to the extension is granted. This should be a formality but they are already a day late the Greek parliament do need to pander to a domestic audience. Sterling is currently consolidating although it does look like it may push through past the seven year high as the stakes are raised. In any event the Euro will remain weak due to the impact of Quantitative Easing which will become more of a focus beyond the current issues with Greece. ECB chief Mario Draghi is due to speak later today and his speech will be very closely watched.

In the UK Governor Carney is due to testify at the Treasury Select committee to explain the inflation report. With sterling rising after his subsequent comments perhaps he will be more guarded this time. I'd expect him to maintain the status quo that any interest rate rises will be small and gradual and data dependant.

The focus this week will be this afternoon as Federal Reserve head Janet Yellen begins her testimony in front of the Senate. Investors will be looking for signs for when the Fed is likely to raise interest rates. Data from the states has been mixed of late and the minutes from the last FOMC meeting indicated that the board had become concerned about low inflation expectations and the stronger dollar. Up until then the Fed had indicated that a rise was probable late in 2015 and the market is looking for some clarity. I'm certain that Yellen will maintain that any rate rises will depend on data and that she will shy away from giving a detailed response. Unless there is a major surprise the dollar should remain supported in the short term.