Dollar surged overnight with the dollar index hitting 14 year high after Fed chair Janet Yellen's positive comments on the economy and rate hike. In her Congressional Joint Economic hearing, Yellen said that "the evidence we have seen since we met in November is consistent with our expectation of strengthening growth and improving labor markets and inflation moving up." And, the incoming data suggested Fed to hike "relatively soon". Meanwhile, she also noted that Fed could change its outlook as the new government roll out the plans of tax cuts and spending. She acknowledged that markets are anticipating "a fiscal package that involves a net expansionary stance of policy" and the program would improve "long run growth and productivity".
Fed fund futures continued to price in over 90% chance of a December Fed hike. More importantly, futures are now pricing in roughly 50% chance of another hike by June, up from prior day's 45%. Dollar index's strong break of 100.39/51 resistance zone now confirms long term up trend resumption after consolidating for 1.5 years. Next hurdle is 61.8% retracement of 121.02 (2001 high) to 70.69 (2008 low) at 101.79. But that should be taken out with ease. Current up trend should be targeting 61.8% projection of 78.90 to 100.39 from 91.91 at 105.19 next and probably to 100% projection at 113.40 next year.
On the data front, German PPI and Eurozone current account will be release in European session today. But main focus will be on CPI from Canada to be released in US session. US will also release leading indicators.