Yellen’s Speech: No Reason For A Vigorous Market Reaction

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After a long list of Federal Reserve officials came out supporting a rate hike in March, Fed Chair Janet Yellen topped it off by saying that barring any hurdles, the Fed will raise rates on March 15th. What does it mean?

Here is their view, courtesy of eFXnews:

One vote for No hike in March, and one vote For, but its who was on either side that will tell the story for markets. Yellen was about as clear as she could be in a pre-meeting remark in suggesting that the Fed is likely to hike in March, and that will swamp any attention to Bullard’s dovish take today, particularly since Bullard was known to be the FOMC’s most dovish member. Yellen notes that the last half of 2016 allowed the Fed to gain confidence that it would meet its goals for employment and inflation. For a March hike, the committee will have to pass one test, “whether employment and inflation are continuing to evolve in line with our expectations”.

Unless payrolls has a big miss, the modest divergence in GDP indicators vs. expectations would not likely be enough to stay the Fed’s hand. 

Given that a rate hike is nearly fully priced in, with one more hurdle (payrolls) still ahead next week, there’s no reason for a vigorous market reaction today.

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About Author

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 the 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.

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