Forex Marketz Daily Forex News – Fully Markets Update
Points to consider with Yellen and the US Dollar:
- The US Dollar lost its gains overnight. It ended a 4 day losing streak yesterday.
- The rally seen yesterday was thanks to the hawkish analysis of Federal Reserve Chair (Fed) Janet Yellen’s remarks before the US Senate.
- Do not bet on follow through with the looming Brexit vote this week.
The US Dollar moved lower overnight after having a good day during the US trading session. The Almighty buck ended a four day losing streak thanks to Fed Chair Janet Yellen’s perceived hawkish testimony to the US Senate. The Dollar tracked a rally in front-end US Treasury yields, which also moved higher. This means that Forex and bond traders interpreted her remarks as hawkish.
Yellen was dismissive, albeit a bit cautiously, of the disappointing non-farm payroll (NFP) as she stated the slowdown was transitory. She also said that the central bank expects inflation to rise towards its two percent objective as soon as the headwinds fade. This means the Fed will proceed to raise interest rates, on a cautious path. They will, most likely, raise rates again in the autumn before the end of the year, then wait a longer period of time before raising again.
Brexit will Complicate Yellen & CO. and Dollar Trading this Week
The speculation towards Yellen and the Fed’s monetary policy might not find follow through this week, especially if the United Kingdom votes to leave the European Union this Thursday (tomorrow). Yellen has already stated that this vote will have significant economic repercussions for the global economy and it will trigger volatility with the economy of the United States.
If the UK votes to leave the EU, the degree of such an event will have such a dramatic and volatile effect across the financial spectrum, that it will grossly effect the path of the United States Fed on its path towards monetary policy normalization.
This means that Forex traders need to be cautious not only with the US Dollar but with anything Yellen has said until the dust settles from tomorrow’s Brexit vote.
