On Friday Federal Reserve President Janet Yellen told a conference of policymakers that a ‘high-pressure' economy may be necessary to undo the damage caused by the 2008-2009 financial crisis that caused decreased output and decreased employment opportunities. Yellen's comments caused swift reactions in the markets, with U.S. Treasury prices falling sharply and yields shooting higher for the third consecutive week. Analysts began to speculate that such high pressure policies could pose the risk of higher inflation even while improving the economy by creating more jobs and boosting consumption.
In conjunction with Yellen's comments on Friday, stronger-than-expected U.S. economic data was released, with retail sales showing a rise of 0.6 percent in September, the strongest gain in four months. Producer prices also showed a rise better than expected on Friday, with a rise of 0.3 percent instead of the anticipated 0.2 percent increase. Following these reports, analysts remain largely hawkish for a December rate hike. The U.S. dollar index closed at six-month highs on Friday, closing at 99.997, fueled by Yellen's comments and the data reports.
Despite the barrage of U.S. data out last week, traders are looking towards other currencies and reports in the coming week, including China's Q3 GDP number, U.K. employment reports and the RBA minutes. The upcoming ECB meeting will also keep eyes glued to the euro, which has recently hit lows of 1.10 against the greenback. Personally, I'll be happy to look away from the U.S. for a minute, both from the election drama and the ongoing rate hike saga. What are you looking towards next month?