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A Fed warning and a 'decisive' week for euro dollar
The US Federal Reserve's Jeremy Stein, who sits on the Board of Governors, late on Friday delivered a major speech where he said "monetary policy should be less accommodative... when estimates of risk premiums in the bond market are abnormally low". John Hardy, Saxo Bank's Head of FX Strategy, says this should be USD supportive as it again raises the bar for the Fed's further tapering of asset purchases. However, he notes that world asset markets hardly seem to be taking notice, at least not yet.
Looking ahead to the rest of the week, John says this is something of a decisive week for euro dollar. PMI data on Monday was mixed for the eurozone with France surprising on the upside but there was disappointment for Germany. He says the German IFO survey on Tuesday will be a big test for the euro.
John also looks at Japan which is coming to the end of the financial year. Trading is choppy in dollar yen ahead of major data releases on Friday. The impact of a rise in VAT on April 1st will be a crucial factor for Japan's economy over the coming months, he says.
02:55 minutes
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