Overview

WEEKLY FX OUTLOOK Markets spent much of the week treading water before Yellen sparked a
short-lived spurt of USD strength, with all eyes remaining on Fed speak next week as well as US
nonfarm payrolls
The August lull continued for much of this week, with volatility particularly muted, accompanied by
light newsflow. Much of the session was spent awaiting comments from Feds Yellen, with recent
rhetoric from the likes of Fischer and Dudley striking a more hawkish tone and market participants
speculating as to whether Yellen may follow suit. Rhetoric from Yellen saw a fast money move higher
in the USD, after she stated that rate hike case has strengthened in recent months and economy is
nearing the Fed's inflation and employment objectives. However, the USD strength was short lived
given the lack of a specific mention of September, combined with the quantity of data still due from
the US ahead of the next FOMC meeting on September 21st.
Elsewhere, one of the more notable movers this week saw significant upside in USD/ZAR amid
uncertainty over the future of the Finance Minister after reports stating that the police have
summoned him over an investigation into a suspected rogue spy unit in the tax service. NZD has also
seen focus this week, with NZD/USD trading higher by around a point by Friday after RBNZ governor
Wheeler who warned against rapid rate cuts and stated immediate easing is unnecessary.
Looking ahead to next week, it appears USD is set to remain in focus, with a host of Fed speakers
scheduled as well as the latest nonfarm payroll report. Given Yellens tone, the upcoming data and
rhetoric will take on a heightened significance, as to the legitimacy of a possible September rate hike
is tested. Elsewhere, next week also sees CPI readings from Germany and the Eurozone, as well as
manufacturing PMIs from across the globe.