Today, market focus will be on the US Federal Reserve (Fed) Chairperson, Janet Yellen, as she is due to give a speech at the Economic Club of New York, wherein investors will closely monitor her remarks for hints regarding the central bank’s plans for a further increase in interest rates. Expectations are for the Fed Chairwoman to voice the majority view of two rate rises this year which is consistent with a moderately growing US economy and limited inflationary pressures.

In economic news, the Conference Board’s Consumer Confidence Index in the US is scheduled for release later in the day. In Europe, data out early this morning, showed that the Euro zone’s money supply held steady in February, while new loans issued to consumers and businesses in the private sector rose. Investors also saw the release of mixed sentiment reports in Italy.

Pound Sterling – UK Markets

The Pound has surrendered its earlier gains and is currently trading in a tight range against the US Dollar this morning as trading volumes remain thin amid no major economic releases in the UK today and on continued fears of a possible UK exit from the European Union. Recent polls suggest an increase in the possibility of the UK leaving the Euro bloc, following attacks in Brussels, thus adding to weakness in Sterling. Given the empty UK economic docket, direction in trading in Sterling against its key peers today will be dependent on updates from other major economies. Later in the week, investors will eye a slew of key UK economic releases, including the GfK Consumer Confidence Survey, fourth quarter domestic growth figures, net consumer credit and mortgage approvals for further indications about the state of the economy.

Yesterday, the Pound - US Dollar currency pair surged above the 1.42 mark after a string of downbeat economic releases in the US. Also, a number of hawkish comments made last week by key Fed officials about a further rise in rates, failed to support the greenback.

US Dollar – US Markets

Yesterday, a government report showed that the total income of US individuals rose more than anticipated in February, supported by solid job creation and a tightening labour market. Also, data indicated that US personal spending recorded a modest gain in February, matching the large downward revisions to spending in the previous month. Finally, the Personal Consumption Expenditures Price Index weakened in February from the previous month, while it held steady annually.

This morning, the US Dollar has partly recovered against the major currencies after a minor pullback, following data released yesterday. Today, market participants will closely follow speeches by the Fed Chairwoman, Janet Yellen, and Fed San Francisco President, John Williams, especially after several hawkish comments by Fed officials last week pointed towards a rate rise as soon as April. On the economic data space, the US consumer confidence index, which is due later in the day, will offer fresh insights on the nation’s economic activity and recovery, and subsequently add to evidence to gauge the Fed’s interest rate outlook.

Euro – European Markets

The Euro has failed to maintain its earlier upside momentum against the greenback this morning. The European economic calendar is light today, with the only data releases in the form of confidence readings in Italy and the Euro zone money supply figures which came out earlier today. Data showed that consumer morale in Italy improved in March, against expectations of a further deterioration in confidence from the previous month. However, Italy’s business confidence indicator unexpectedly dipped in March. In other news, the Euro zone’s broad money supply index held steady at a 5% growth rate last month, compared to a year ago, while lending to the private sector increased in February for the first time since November 2015. However, these economic releases hardly attracted any market attention today.

Tomorrow, the Euro zone’s consumer and economic sentiment reports together with the German flash inflation data will stir significant interest among Euro investors. Later in the week, traders will also eye the preliminary Euro zone CPI report and manufacturing PMI readings from the Euro zone and its peripheries.

Other Currencies – Highlights

The Japanese Yen is currently trading on a weaker footing against the US Dollar on the back of mixed data releases in Japan. In some positive news, overall household spending in Japan sharply rebounded in February. The improvement seen in spending was by far the best since August 2015. However, the report was at odds with the picture presented by Japan’s retail sales which contracted for the fourth straight month in February. On the other hand, in the year to February, retail sales in Japan slightly grew but still showed signs of persistent weakness in consumer spending. Separately, Japan’s job market disappointed in February as the unemployment rate jumped higher than market estimates. Also, earlier today, reports of another round of stimulus measures by the Japanese government in a bid to revive economic growth added to further downside pressure in the local currency.

Moving ahead, comments by the US Fed Chief, Janet Yellen, on the future interest rate path, as well as the first reading of Japan’s industrial production figures for February, will be monitored for further direction.