Uncut sheets of U.S. five-dollar bills with the image of President Abraham Lincoln
IN PHOTO: Uncut sheets of U.S. five-dollar bills with the image of President Abraham Lincoln are inspected through a magnifying glass at the Bureau of Engraving and Printing in Washington, D.C., March 26, 2015. On April 15 the United States commemorates the 150th anniversary of President Abraham Lincoln's assassination. Events will include the re-enactment of his funeral in Springfield, Illinois, as well as talks and plays at Ford's Theatre in Washington D.C., where Confederate sympathiser John Wilkes Booth shot him in 1865. Lincoln, who kept the Union together in the American Civil War and helped secure the end of slavery, has enduring appeal both in the United States and worldwide: his life is celebrated at the Lincoln Memorial in Washington D.C., five-dollar bills carry his image and Stephen Spielberg directed the 2012 film bearing the 16th president's name. REUTERS/Gary Cameron

Bell FX Currency Outlook: The USD maintained its firmer tone against the AUD as US Federal Reserve President Yellen reaffirmed that US interest rates will likely rise this year.

Australia: The AUD weakened toward the .7800 level as the latest US CPI figures were generally in line with expectations and the US Fed President said “it will be appropriate at some point in time this year to take the initial step to raise the federal funds rate”. With US jobless claims sitting at 15 year lows most analysts continue to believe September is the most likely month for the US Federal Reserve to start raising interest rates although Yellen did emphasise that the rises will be data dependent. With no domestic data releases today we expect the AUD to trade in a very narrow range today and tonight since there are holidays in the US (Memorial Day), London and Hong Kong.

Majors: US CPI figures on Friday rose 0.1% mom and fell 0.2% yoy while core inflation which excludes food and energy prices rose 0.3% mom and 1.8% yoy which was in line with expectations. Fed President Yellen also noted in her remarks on Friday that the cost of delaying interest rate rises outweighed the benefits of overheating the US economy. In Germany, Q1 GDP came in the same as the first estimate at 0.3% qoq and 1.1% yoy. The German IFO survey was generally in line with predictions although the business confidence survey slipped a bit. Negotiations between Greece and their European creditors appear to be conciliatory but most analysts expect they will not be able to repay the IMF EUR1.5bn which is due in June. The Greek finance minister that the country had met 75% of the creditor demands. The GBP was weaker against the USD as the chances of the UK exiting the EU (“Brexit”) in the future rose. The Bank of Japan’s monetary policy remains on unchanged and they will continue to purchase government bonds at the current annual rate of 80 trillion JPY. Japanese 10 year government bonds yield 38 bps, the second lowest in the world.

Economic Calendar 25 MAY

  • UK, US US Memorial Day, UK Spring Bank holidays
  • JN Trade Balance (Seasonally adjusted)

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