Home Janet Yellen officially nominated as next Fed Chairwoman –
Forex News Today: Daily Trading News

Janet Yellen officially nominated as next Fed Chairwoman –

The White House announced that the President Obama will officially nominate Janet Yellen as the next head of the Federal Reserve – a woman will hold the position for the first time.

Yellen’s nomination to this powerful position was not a surprise after Summers withdrew his candidacy. Yellen, currently Bernanke’s Vice Chairman,  is considered a dove, that would potentially keep loose monetary policy for longer. But as this was already priced in, the markets reacted with a stronger dollar.

Yellen is a long serving FOMC member, and from 2010, Bernanke’s second in command. Contrary to Bullard, Fisher and Dudley, she kept a relatively low profile in her speeches, but her messages were clearly in line with those of Ben Bernanke – leaning to the dovish side.

Obama will announce her nomination, which is likely to be approved by a Senate committee. Assuming a swift process, she will enter Bernanke’s shoes in January. With the government shutdown and debt ceiling crises still with us, QE tapering will likely be postponed and await Yellen. As a dove, will she keep QE at current levels for longer? Or, with her dovish image, perhaps she will want to show a hawkish side?

This is still to be seen. At the moment, the dollar is stronger on a “buy the rumor, sell the fact” reaction. Here is how it looks on EUR/USD:

EURUSD Falling after Janet Yellen nomination as chairwoman October 9 2013 forex trading

  • EUR/USD drops to 1.3550. Loose monetary policy is also Europe’s future.
  • USD/JPY is rising above 97 to 97.40. This is helped by a rise in the Nikkei stock index. More QE = stronger stocks.
  • GBP/USD fell from above 1.61 to 1.6050. The BOE convenes tomorrow.
  • USD/CAD extends its rise and moves towards 1.04. The US government shutdown is bad for the Canadian economy.
  • AUD/USD is holding up quite well so far.

Will this trend continue?

Further reading:  USD Index Could Make A Corrective Bounce – Elliott Wave Analysis

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.