Yellen’s Amherst speech yesterday did inititally boost the USD because the market now understandss that rates will rise in 2015...gradually, but they will rise. However the speech had a firmly dovish tone , repeating that the unemployment rate is below the NAIRU and that an extended strong recovery would generate supply-side benefits. Nevertheless it was enough to stress that no Fed rampage was on the way. The key message, I think, is to expect a very dovish December lift-off. October is possible but she did not go out of her way at all to make October live.
Asian equities recovered from the fall yesterday, although concerns over China continue to block chances of a rally. Not a day that inspires action on Equities.
Looking ahead to today’s events, speeches by Fed members Bullard and George are likely to attract some attention given their relatively hawkish stance compared with the rest of the FOMC, despite not being voting members this year.
Datawise, we only have US GDP but in the way of trades for today, my suggestion is to stay flat.
The trending pairs have pushed far enough for a week based on my estimates, and today the probability of further continuation is quite low.
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