Fed Funds Firm on Yellen's Testimony

Dollar flirts with 2017 low after Yellen says the Fed will take its time raising rates

Dollar flirts with 2017 low after Yellen says the Fed will take its time raising rates

The Committee continues to expect that the evolution of the economy will warrant gradual increases in the federal funds rate over time to achieve and maintain maximum employment and stable prices. This suggests to me Brainard really only sees one more hike (presumably in December if data permits) before we get to levels where the key USA interest rate suits economic activity.

In a prepared testimony to Congress, Yellen contended the economy is healthy enough to absorb further rate hikes at a gradual pace, along with a slow wind down of the Fed's $4.5 trillion bond hoard accumulated following the financial down turn.

Yellen signaled that the Federal Reserve won't rush to tighten monetary policy, citing inflation that's continually lagged its target.

Fed Governor Lael Brainard said on Tuesday that she would want to assess the inflation process closely before making a determination on further interest rate hikes.

The pair that we've been tracking for USD-weakness posed an initial topside pop as this morning's statement was released, as EUR/USD set another fresh 14-month high. The next possible support for the greenback is seen around 1.16 versus the euro and 0.93 against the franc.

Heavy rains forecast in South Odisha districts in next 72 hours
Free kitchens have been opened for affected people in those areas as well as in Cuttack city. Besides, many people have been stranded in hard situations on hill tops.

The Dow rose to a record high after Yellen's less hawkish than expected congressional testimony was seen as a green light for Wall Street to step up riskier trades.

Yellen considered the risks of faster or slower growth than the Fed now expects as roughly equal.

Looking ahead, Canada new housing price index for May, US PPI for June and US weekly jobless claims for the week ended July 8 are slated for release In the NY session. The core personal consumption expenditure (PCE) price index, a gauge for the inflation level preferred by the Fed, increased 1.4 percent over the year in May, lower than the 1.5 percent in April and 1.6 percent in March.

According to her, the tight labor market may have upward pressures on wages and prices, as slack in the economy diminishes. Prices appear to be trying to garner some support around 113.00, but a bit-lower we have a really big zone of potential support that could be very interesting to bullish continuation strategies, and that resides from the prices of 111.61-112.40.

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