iFOREX Daily Analysis : January 19,2017

 | Jan 19, 2017 07:16AM ET

The dollar posted strong gains today after five straight days of selling that put its value against a basket of major currencies at the lowest in more than a month.

The rebound followed Yellen’s speech where she said sees rate hikes "a few times a year" as the economy continues to recover until it reached the neutral rate which she expects by the end of 2019.

On the economic front, both headline and core inflation continued to move higher in December, matching expectations and placing pressure on the Fed to move forward with policy tightening.

It was the first time since the second quarter of 2014 that both readings settled above the Fed’s 2% inflation target. U.S. industrial output was up 0.8% in December from November, official data Wednesday showed. Production was forecast to rise 0.6% month-on-month.

Meanwhile, oil prices fell to a one-week low on Wednesday as concern over increases in U.S. production offset data from OPEC’s monthly report saying that its members pumped 33.085 million barrels per day in December, down 221,000 bpd from November.

For today, the ECB is to announce its latest monetary policy decision. The announcement is to be followed by a press conference with President Mario Draghi.

Later in the day, Canada is to report on manufacturing sales and foreign securities purchases and the U.S. is to release a series of reports, including data on building permits, housing starts, initial jobless claims and manufacturing activity in the Philadelphia region.

Fed Chair Janet Yellen is to speak at an event in Stanford.

GBP/USD

The dollar pushed higher against the sterling on Wednesday, supported by the release of positive U.S. inflation data and following hawkish comments by Fed chair Janet Yellen on the future monetary policy of the Fed.

Earlier Wednesday, the U.K. Office for National Statistics said the unemployment rate remained unchanged at an 11-year low of 4.8% in the three months to November, in line with forecasts.

The claimant count declined by 10,100 in December, compared to expectations for an increase of 5,000 people.

For today, the U.S. is to release a series of reports, including data on building permits, housing starts, initial jobless claims and manufacturing activity in the Philadelphia region.

Fed Chair Janet Yellen is to speak at an event in Stanford.