Summary:

• Reports that Yellen out of the race for next Fed chair
• US initial jobless claims come in at 233k
• USDIDX testing key resistance at 94

Unconfirmed reports that the incumbent Fed chair Janet Yellen has been ruled out of the running for remaining in the position beyond her current term could have an impact on the US dollar. Politico, an American news organisation, have reported that Yellen will not be re-appointed seemingly leaving a two horse race between Powell and Taylor. 

 The USD is rising today with only a handful of currencies stronger than the buck. Source: xStation

Yellen has presided over numerous rate hikes during her tenure as well as setting in motion the steps to reduce the Fed’s balance sheet. Despite this, she is still regarded by many as a Dove and therefore her re election had been seen as potentially negative for the US dollar. Along these lines her being out of the running could in fact be seen as USD positive. *It should be noted here that a White House official has since stated that President Trump is yet to make a final decision on who to nominate for Fed chair role. 

The only real US economic release of note today is the weekly initial jobless claims which rose to 233k. This is a slight rise on the 223k seen last time out and not far from the consensus forecast of 235k. Even after this pick-up the data remains strongly suggestive of a healthy labour market.

 The USDIDX is testing potentially key resistance at 94.05. A break above here could see a prolonged move higher. Source: xStation

The USD index has edged higher today, helped in no small part by a fall in the EURUSD which has fallen after the ECB announced a 9 month extension to their current asset-purchase programme. The market is now testing potentially key resistance at 94. There is possible a longer term inverse head and shoulders reversal formation developing here with the neckline around 94.05. A break above here could be seen as a clear positive development and may lead to a prolonged move higher.