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Hawkish Janet Yellen, Positive US Economic Data Gives USD Strength

Published February 15, 2017
  • USD/CAD showed strength after Federal Reserve Chair Janet Yellen said it would be unwise to wait too long to raise interest rates, as long as American economic growth continues and inflation increases
  • Yellen reiterated that current labour market conditions were helping inflation move to the 2% target that would encourage the FOMC to raise rates at “upcoming meetings”; a March rate hike is now a possibility
  • Yellen will speak again today at 10:00 AM EST to the House Financial Services Committee; Philadelphia Fed President Patrick Harker, Boston Fed Chief Eric Rosengren and New York Fed President William Dudley will all speak later today as well
  • Fed members will likely comment on US Consumer Price Index and Retail Sales data this morning; Core CPI and Retail Sales exceeded expectations month on month
  • Oil prices moved lower this morning after the American Petroleum Institute showed a substantial increase of US oil inventories (9.9 million barrels) in the week ended February 10
  • The market waits for more details from the US Energy Information Administration when they release their official weekly oil supplies report at 10:30 AM EST
  • Canadian month-on-month manufacturing sales showed a good increase (2.3% actual change in total value of sales made by manufacturers vs 1.4% expected); USD/CAD is moving up due to lower oil and US economic robustness

Chart (1) US Inflation Since 2012