Dollar bulls were punished by Yellen today as she came out with a dovish tone at the Economic Club in New York. This was a surprise as the market had been slowly accumulating a bullish position over the last few days. Yellen's speech however was quite important as it now puts the market in a precarious position as rate hikes are looking more and more distant than ever before, as Yellen stressed the fact that global markets are still not quite right at present. One of the major points was inflation as future forecasts at present point to it being weaker than expected, and this will have a major impact on the monetary policy of the FED, as strong inflation is required in an effort to lift rates in the distant future.

The dovish nature of Yellen's speech certainly pushed down the value of the USD, but it also pushed up the S&P 500 as it hit a weekly high before pausing in its tracks. Dovish behaviour from the FED certainly pans out nicely for bullish traders in the equity markets. Right now the S&P 500 is looking very bullish though and resistance at 2053 is likely to be a strong target for traders. Beyond this level resistance can be found at 2074 and 2101 and the market could look to test these key levels if inflation continues to be weaker than expected and the dovish tone of the FED continues. The only caveat here is that the FED will likely look to turn this around at some point and be hawkish, but for now the cap is back on the bottle when it comes to hawkish rhetoric.

Riding of the back of today's market movements was the USDCAD as the Canadian dollar continued to find some more strength after rejecting resistance just a few days ago. At present the Canadian budget from the current government is priced in and the market is playing of USD weakness more the economic data from Canada. For the traders looking for economic data to play off the upcoming crude oil inventory data will be a major catalyst for movements as the oil is still strongly correlated to the USDCAD at present. Current expectations are for a smaller surplus compared to last week, but last week's surplus was much stronger than expected and we could be in for another strong reading this time around as well.

The current level of support at 1.3037 has been tested earlier today and has so far held up to pressure. The real test will be how the market reacts to this key level and if we see a push through. Despite the recent breakthrough of the bearish channel, I still feel that we are going to see further dips here and a push down to 1.2899 is likely to be a buying signal for a large number of traders out there if this key support level holds. Either way the market is looking to make waves at present and I anticipate we will see a large amount of volatility around the USDCAD in the coming week. 

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