Saxo Bank | Jul 14, 2014 12:37PM ET
Monday has heralded a new world order. Germany is on top of the heap; FIFA World Cup champions. Argentinians are crying for themselves Not only did they lose the game but an unruly mob of disgruntled "La Albiceleste" fans came out second best against heavily armed Brazilian paramilitary riot police. Sore losers were truly sore losers after naked skin met riot baton, steel toe boots and tear gas.
Asian FX markets started slowly and then mostly idled ahead of the results from the Bank of Japan meetings today and tomorrow. European FX activity was understated with Germany likely still celebrating the victory in Brazil and France is on holiday for Bastille Day. A Mario Draghi speech at the end of the European day and tomorrow's Humphrey-Hawkins testimony by Janet Yellen suggests traders may stick close to home.
Mark Carney, Janet Yellen and Humphrey-Hawkins
GBP/USD rallied above levels not seen since 2009 which may have precipitated Mr. Carney reopening his mouth to change feet. Last week the BoE admitted that rate hikes weren't imminent. Traders are hoping that tomorrow's speech before the Treasury Select Committee will shed more light on the timing of a UK interest rate increase. Disappointment may see GBP/USD rapidly retreat from its current lofty levels and probe support at 1.7000.
Traders will be watching Janet Yellen's Humphrey-Hawkins testimony, well, like a hawk. Did the latest US employment figures have any impact on her well-know dovish stance? Is six months back to being an extended period of time or is six months merely half a year? The US dollar may drift higher ahead of her remarks on anticipation (hopes) that her comments may be construed as hawkish, which would be a mistake. It is the summer and tapering is still in progress until October. Any shift in the Federal Open Market Committee's stance may not be telegraphed until September.
Key US Data releases
BoC walking a very fine line
USD/CAD technicals
-- Edited by Clare MacCarthy
Michael O'Neill is an FX consultant at IFXA Ltd.
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