We had the much awaited first hearing for new Fed Chair Jerome Powell overnight and he did not disappoint the dollar bulls in the market. As expected the actual report was very much in line with the recent Fed party line being but in the Q&A session afterwards he advised that his” personal outlook for the economy has strengthened since December”. This led to dollar buying across the board with the Dxy now back up to 90.40 and challenging recent highs around 90.55. The US equity markets finished the day well in the red and we expect to see the Asian markets open in the negative across the region today.
We did have some US data out in the form of the Durable good numbers which came out worse then expected and the Consumer Confidence data which was better, but these were both overshadowed by the comments from the Fed Chair.
The Antipodean currencies took a good hit straight after the comments with the Aussie trading swiftly down 50 pips and the Kiwi following to a similar degree. With the commodity prices also under pressure the Aud in particular will struggle over the next few trading sessions and if the current sentiment continues we should see it take out this years lows at 0.7759 and open up the way for a move down to 0.7500.
Looking ahead to today’s trading sessions and traders will be looking for fresh levels to buy the greenback. Once again it is quiet in the Asian session in terms of fundamental data releases and it’s not much better in the London time zone. However into the New York session and the US Prelim GDP q/q numbers are due with expectation at 2.5%, anything stronger than this should lead to further topside potential for the dollar.