Dovish Yellen?

Mixed fortunes

It has been a mixed result for Apple this weekend after the FBI cracked the encryption on a terrorist's IPhone. Apple has maintained its honour in the face of pressure from the regime but the Feds have proved the phone's operating system to be insecure. It has been a mixed result for sterling too.

Between Maundy Thursday and this morning the pound has been the strongest performer among the major currencies. It is up by an average of 0.8% - one euro cent - against the other dozen most actively-traded currencies. Amongst its gains are one and a quarter US cents, one and a quarter Swiss cents, two and three quarter Japanese yen and, yes, one euro cent. But sterling is lower on the week against just about everything, principally as a result of the ongoing concern about Britain's future within the EU.

The pound's weekend rally was largely accidental. Two sets of UK retail sales figures on Thursday told similar stories, neither of them particularly positive. The CBI's Distributive Trades survey came in at 7, less than half the forecast number and among the lowest in the last two years. The more important official data showed sales down by a monthly -0.4% in February, a smaller decline than the predicted -0.7% but a decline nevertheless.

Data dampen dollar

The weekend's biggest casualty was the Japanese yen, which weakened by -1.7% against sterling and -0.8% against the US dollar. It was steady on Friday but moved lower on Easter Monday as did the US dollar, which was yesterday's back marker.

Friday's Japanese inflation data were roughly in line with forecast, with the consumer price index up by an annual 0.3% and core inflation, which ignores the impact of food and energy, ticking up to 0.8%. However, the talk in Tokyo is that Prime Minister Abe could well make a further postponement to the long-awaited sales tax increase and that he has more stimulus measures in mind.  There were even rumours that he might call a premature general election.

The dollar's problems were mostly statistical. Thursday's US durable goods orders figure was down by -2.8% and Monday's personal spending data failed to impress investors, rising by just 0.1% in February.

Yellen up

There are few ecostats on today's agenda. The Conference Board's assessment of US consumer confidence is the most important among them but it will be overshadowed by Federal Reserve chairperson Janet Yellen's speech at teatime.

Two Fed honchos have speaking engagements today. First up is John Williams, the president of the San Francisco Federal Reserve Bank. Then, at about half past four, Janet Yellen will address the Economic Club of New York.

Investors have come up with the idea that Ms Yellen will take a softer line than that of her colleagues last week, who all raised the possibility of a rate increase next month. That anticipated dovishness is weighing on the dollar: if it fails to materialise, look for a bounce.