The U.S. dollar traded in mostly quiet ranges as lower-than-average trading volumes has not led to higher volatility. Yesterday’s biggest news event was a speech from Fed Chair Janet Yellen. As usual, Yellen held an even tone. She expressed her view that the Fed’s goal is to maintain the economy’s momentum and the central bank no longer has to “press down on the gas pedal.” We still expect the Federal Reserve to raise rates two more times in 2017.
We expect tight ranges to persist as there is no major risk event on the schedule for today. U.S. retail sales on Friday could move markets. But the more likely scenario is that the greenback settles into ranges ahead of the Easter holiday. Most of Europe is closed on Friday and Monday. U.S. stock markets are also closed on Friday. Tempus will maintain regular office hours as currency markets remain open.
The Japanese yen has found support as a safe-haven as geopolitical risk across the globe have boosted the currency. Concerns over the French elections have made investors cautious as odds have improved for anti-Euro candidate Marine Le Pen. Skittish investors are also using caution as tensions in Syria and the Korean peninsula rise. If the U.S. bombing raid in Syria proves to be a one-off and Marine Le Pen losses the election later this month, the yen should retreat.
The British pound rose against the U.S. dollar as data showed that inflation remains above the Bank of England’s 2.0% target. The 2.3% yearly uptick in price pressures was mostly in line with expectations. But higher consumer prices are already having a negative effect on real household income. A separate report today showed that U.K. retail sales fell the most since 2011 in the first quarter. Sales dropped 0.7% in the three months through March, according to the British Retail Consortium.