The markets are in a state of anabiosis before the key figures of the central banks of the USA and Europe act.
Today, the chairman of the US Federal Reserve, Janet Yellen, will make the first speech.
If her comments are related to the further possibility of tightening US monetary policy this year, it is quite possible that the demand for the US dollar will grow. If, however, Yellen states that the economic performance is slightly different from those forecast and that the current interest rates meet all the requirements of the Fed, the pressure on the US dollar could rise, which will lead to a sharp increase in risky assets, as well as gold.
Toward the end of the North American session, the President of the European Central Bank, Mario Draghi, will speak.
The growth potential of the European currency will be jealous of him, since if Draghi refrains from commenting on problems with a strong euro, this will lead to new purchases of a single European currency. If, on the contrary, the head of the ECB touches on the topic of the high rate of the single European currency, which hinders the growth of inflation and GDP in the eurozone and also puts downward pressure on exports, the demand for risky assets may fall sharply, which will lead to purchases of the US dollar and the collapse of the EURUSD pair in the afternoon.
There is also a scenario that Draghi will not say anything at all about the short-term prospects for monetary policy, but it is unlikely that the ECB president will completely avoid this topic, given that the September meeting is approaching, which can mark the start of the curtailment of the policy of low interest rates in the euro area.
Data on production activity in the area of responsibility of the Federal Reserve Bank of Kansas City provided support to the US dollar yesterday afternoon. According to the report of the Federal Reserve Bank of Kansas City, the composite index in August this year rose to 16 points against 10 points in July. The manufacturing production index of the Fed-Kansas City in August rose to 22 points from 4 points in July against the backdrop of recovery of supply indices.
Yesterday, with a series of statements, President of the Federal Reserve Bank of Dallas, Robert Kaplan, focused on the fact that it is now for the Fed to show patience. However, he also did not rule out the possibility of another interest rate increase in 2017. In his opinion, the neutral level of the interest rate is closer to 2% -3%.
Kaplan also touched on the topic of stopping the operations of the government, which was recently stated by US President Donald Trump. According to Robert Kaplan, the potential stoppage of the government's work is the risk factor for the September meeting of the Fed, as immigrants will be key to economic growth in the future.
Given the recent statements of a number of Fed officials, they all agreed on the need to "slow down" with an increase in interest rates. The last word is for the head of the Fed.