Today we
had the anticipated testimony by the FED’s chairwoman, Janet Yellen. Her
comments were first perceived as dovish, due to some concern that she was
placing on certain sectors of the economy like tech and social media stocks.
Maybe those sectors are getting overvalued. But she also said that the U.S.
economy is on the right track to recovery and if the labor markets keeps
showing improvement some action may be taken. This was interpreted as a hawkish
comment and made the Dollar take off versus most of its counterparts. The Euro,
the Pound, and the Yen have all retraced their gains versus the greenback. Even
emerging market currencies have fallen behind the Dollar.
But we
still need to see how the FED’s decisions may influence the markets. It is true
that the FED will have to raise its interest rates sooner or later, even if
they need to wait another year to do so, but the Bank of England has to deal
now with a rising inflation that was not expected and they may be tempted to
take the lead ahead of the FED and raise their rates first. Therefore, we must
be aware of a possible bullish continuation on the GBP/USD in the long run.
great post . thank you
ReplyDeleteGreat post and we will see tomorrow it's results.
ReplyDeleteYellen yesteray signaled that if the employment situation improved at a quicker pace than currently estimated, rate hikes could come earlier than projected by the FOMC at the moment, but still she saw rates remaining at low levels long after the withdrawal of QE.
ReplyDeleteThanks for such an informative article.
ReplyDeleteCool Info Thanks.
ReplyDeleteJanet Yellen was a bit "hawkish" yesterday. In his speech to the Senate, the President of the U.S. Federal Reserve not added any big news besides showing up more and more "hawkish". The leader of the Fed seemed to be in some way, even if indirectly, to alert investors to a possible change in interest rates, as did Carney, Governor of the Bank of England. And we all know how the pound ultimately react to notices thereof. I believe that something will happen to the dollar in the not too distant future, in which the vision of Yellen and FOMC will gradually happen.
ReplyDeleteJanet Yellen was a bit "hawkish" yesterday. In his speech to the Senate, the President of the U.S. Federal Reserve not added any big news besides showing up more and more "hawkish". The leader of the Fed seemed to be in some way, even if indirectly, to alert investors to a possible change in interest rates, as did Carney, Governor of the Bank of England. And we all know how the pound ultimately react to notices thereof. I believe that something will happen to the dollar in the not too distant future, in which the vision of Yellen and FOMC will gradually happen.
ReplyDeleteSomething did happen to dollar, let's see how long will it last.
ReplyDelete