Philly Fed Plosser (07.45GMT), Boston Fed’s Rosengren (11.45GMT), Dallas Fed’s Fisher (13.00GMT), SF Fed’s Williams (19.05GMT) and Richmond Fed’s Lacker are all due to speak today as well as FRB governor Raskin (16.30GMT).
The key focus will be where we stand with regards to the tapering debate with the prospect of added colour on the exit roadmap for QE.
We also have a speech by Bernanke over the weekend to focus on but this is on Saturday (May 18) but there will be no Q&A so any signals will have to be in the prepared remarks. The title of Bernanke’s speech over the weekend is “Economic Prospects for the Long Run” at 15.00GMT.
The impact of what the Fed does with its QE comes at an important time for risk markets where there has been plenty of focus on risk taking getting a little too exuberant. The S&P500 managed to post another record high yesterday.
FX markets stand at a critical juncture with the $-index having made a move above 84.00 yesterday and a whisker away from breaking last year’s high around 84.10. A break here could see the USD strength extend and even accelerate.
We have looked to play the more positive outlook via USD calls vs the EUR and JPY. We have suggested holding a 3-month 1.25 EUR put/USD call with knock-out at 1.33 as well as a 3-month 108 USD call/JPY put with knock-out at 99.
