Dollar fails to ride on initial momentum and soften mildly in Asian session today. Fed chair Janet Yellen talked about the tightening path in a letter to US consumer advocate Ralph Nader. She noted that "An overly aggressive increase in rates ... would at undercut the economic expansion, necessitating a lasting return to low interest rates." It's generally expected that after the highly anticipated rate hike in December, Fed will keep the pace of tightening slow. However, there were also talks that Fed could lift rates at every second meeting in 2016 and at every meeting in 2017 as inflation makes a startling return. And the fed fund rate could hit 3.50% by the end of 2017. Now that December hike is nearly a done deal and well priced in, the expectations on policy path will be the main drive in dollar's exchange rate.
In Eurozone, ECB executive board member Sabine Lautenschlaeger said that recent data showed that Eurozone was "resistant to uncertainty in the global economy." Thus, "I see no need for further monetary-policy measures, especially not for an expansion of the asset-purchase program." But know that she's formerly vice president of Bundesbank and thus, her view remained consistent with other German officials. Bundesbank chief Jens Weidmann also said last Friday that "I see no reason to talk down the economic outlook and paint a gloomy picture." He noted that " monetary policy measures already taken still need time to fully feed into the economy."
On the data front, Japan PMI manufacturing rose to 52.8 in November versus expectation of 52.1. German Ifo business climate will be the main feature in European while GDP final will also be released. US will release Q3 GDP revision and is expected to see upside revision to 1.9%. S&P Case-Shiller house price and consumer confidence will also be released.