• Higher than expected UK CPI saw cable bounce strongly off support levels at 1.7060. The bounce was extra strong as the market had been trying to trigger stops below 1.7055. Pretty hard to argue with the GBP bulls at this stage but I’d prefer to range trade cable for a while, perhaps 1.70/1.73.
  • Reports that the holding company for Portugese Bank Espirito Santo would file for creditor protection in Luxembourg came out just before Yellen was due to speak perhaps reducing the effect on the EUR. EUR/GBP was nevertheless the big loser, falling by 1% on the day.
  • Yellen didn’t really change her tune although there were a few snippets which might give the hawks some hope. Overall the USD is a tad higher and I am of the opinion that we may get a short-term rally in the greenback with EUR/USD to lead the way.
  • Finally, milk prices fell quite sharply last night at the fortnightly auction driven by reports of large powder stockpiles in China. The NZD/USD fell quite sharply on a combination of this and the Yellen statement. Next decent support is at .8700.