Earlier in the session, there was little reaction to the release of the latest survey from Westpac Bank and the Melbourne Institute. The consumer confidence report revealed a 4.2 percent surge to 101.3. That follows a 3.5 percent decline in January to a reading of 97.3. It also moves back above the key boom-or-bust line of 100 that separates optimists from pessimists. The better-than-expected reading suggests that investors were probably relieved that stock prices recovered after a sharp break in early January.
Wednesday and Thursday’s testimony by Yellen is expected to provide some clarity for traders who are searching for answers amid global volatility and fears of another world recession. Yellen is expected to attempt to balance the central bank’s stated goal of raising rates against the risks of a weaker global economy.
While Yellen is expected to talk about a wide variety of subjects including rate hikes and banking reform, she will be primarily asked to explain how the Fed will be able to raise rates over fears of a weakening world outlook and divergent central bank maneuvering.
Her comments will be released at 8:30 a.m. ET, but her testimony before the House Committee on Financial Services won’t start until 10:00 a.m. ET. Dovish comments should be supportive for the Australian Dollar. Hawkish comments should help underpin the U.S. Dollar.