As expected by many participants, the market experienced a quiet start to the week yesterday with most products trading in familiar ranges. The major US indices all closed the day close to flat leading to little inspiration for the Asian open. The dollar remained in relatively tight ranges against the majority of the majors and US treasury yields finished the day slightly higher.
Despite a rather boring (and anticipated) start to the week, traders are expecting to finish it in a slightly more jaded fashion as they are hit with a barrage of economic data and central bank updates as the sessions progress. The main focus of the day will be Jerome Powell’s semi-annual testimony to congress and given that all the recent data from the US has had markets leaning towards more hawkish sentiment from the FOMC every word from the Fed Chair will be analyzed closely. With benchmark US yields sitting close to multiyear highs any changes in recent outlook and rhetoric could result in some sharp moves across all products.
Looking ahead at today’s trading, the RBA kicks things off for the Asian session with its latest cash rate announcement and statement, another 25 bps is widely expected from them, however it is any update in forward guidance from Governor Phillip Lowe that will create volatility in the market. It’s relatively quiet through the European session and into the North American time zone until we hear from the Fed Chair later in the day.
