US dollar strength continued on Friday against both sterling and the euro, as well as the majority of its other peers. It is thought that a number of factors were behind this: the negative affect on sterling from Mark Carney’s comments on Thursday regarding interest rates, as well as the anticipation for the Federal Reserve Statement this Wednesday which will also focus on interest rates. Negative US data, including Producer Inflation and the Consumer Spending Indicator, did little to halt the dollar’s continuing strength.
We expect this week to be a volatile one: a quiet Monday will see the release of Industrial Production data, forecasted for a slight rise, followed by Building Permit Data on Tuesday. The spotlight however will be on this week’s Federal Reserve Statement Wednesday, where an announcement on a rise of interest rates is expected; many banks and investors are predicting a gradual raise starting in the middle of this year. The press conference that follows will be interesting to see how the members, and in particular Federal Reserve chair Yellen, reacts to interest rates related questions.
Weekly unemployment claims are due Thursday, also forecast to be strong, and Federal Reserve member Lockhart speaking on Friday.