2013-06-28 00:20 GMT

Should the Dollar be Worried about Fed Comments?

Fed Presidents Dudley, Powell and Lockhart spoke yesterday and with the first 2 being voting members of the FOMC this year, its no surprise that their comments triggered intraday volatility in the dollar. All 3 Fed Presidents said that it may be appropriate for the central bank to taper asset purchases in 2013 and end QE buying in mid-2014 but the markets chose to hone in on Dudley's comment that QE depends on the economic outlook and not the calendar and could be prolonged if the economy misses their forecasts. There's no question that the recent rise in U.S. yields has irritated central bankers but the fact Dudley still repeated Bernanke's timing after qualifying the conditions for QE means that this uber dove is most likely onboard with the idea of reducing asset purchases. Fed President Powell's stance was similar - while he sees the central bank scaling back purchases this year, he said it is data and not date dependent. Both Dudley and Lockhart didn't see Bernanke's press conference last week as a strong signal of Fed policy or a major shift but rather a "soft notion" of when QE could end.

U.S. economic reports confirm the economy is equipped to handle less stimulus. Most of the data were in line with expectations with personal incomes growing 0.5% and personal spending growing 0.3%. The healthy trend of stronger income versus spending is a dynamic that the Federal Reserve will be very happy with because it signals that Americans will be more frugal with their spending. The PCE deflator rose 0.1%, which suggests that inflationary pressures are beginning to increase. Jobless claims on the other hand dropped from 355K to 346K, a number that is generally consistent with a continued recovery in labor market. Pending home sales jumped 6.7% last month, enjoying its strongest gain in more than 6 years. The Chicago PMI index and final University of Michigan Consumer Sentiment numbers are due for release on Friday but our primary focus will be on Fed President and FOMC voter Stein's comments on monetary policy.-FXstreet.com

2013-06-28 06:00 GMT

UK. Nationwide Housing Prices n.s.a (YoY) (Jun)

2013-06-28 12:00 GMT

Germany. Consumer Price Index (YoY) (Jun)

2013-06-28 12:30 GMT

Canada. Gross Domestic Product (MoM)

2013-06-28 13:55 GMT

USA. Reuters/Michigan Consumer Sentiment Index (Jun)

2013-06-28 05:27 GMT

AUD/JPY set to recover towards 94.00 - Westpac

2013-06-28 04:32 GMT

GBP/USD struggles around the 20 hourly EMA

2013-06-28 03:29 GMT

EUR/AUD easing below 1.4150

2013-06-28 02:58 GMT

USD/JPY prints fresh weekly highs shy of 99.00