News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Gold
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
More View more
Real Time News
  • AUD/JPY IG Client Sentiment: Our data shows traders are now net-long AUD/JPY for the first time since Sep 16, 2020 11:00 GMT when AUD/JPY traded near 76.69. A contrarian view of crowd sentiment points to AUD/JPY weakness. https://www.dailyfx.com/sentiment https://t.co/ixxjaexZoP
  • The US Dollar is struggling against ASEAN currencies despite weakness in the S&P 500. Capital remains flowing into emerging markets, keeping USD under pressure, could this change? Find out from @ddubrovskyFX here:https://t.co/nwhy3XhE74 https://t.co/5S6AARA0DA
  • Gold prices is consolidating at US$ 1,868 - its 100-Day Simple Moving Average (SMA) line. Will it hold above this key support level? https://t.co/o0BM7ABeka
  • Commodities Update: As of 02:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.23% Gold: -0.07% Silver: -0.97% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/X6JBrsCCnF
  • While @IG_US Client Sentiment is offering a mixed outlook for the S&P 500 and #Dow Jones, these could be at risk to a turn lower based on multiple bearish technical warning signs. Get your market update from @ddubrovskyFX here:https://t.co/9kYnq6hH1f https://t.co/bLHDVvd44Q
  • Forex Update: As of 02:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.15% 🇳🇿NZD: 0.11% 🇨🇦CAD: 0.06% 🇪🇺EUR: -0.01% 🇨🇭CHF: -0.01% 🇯🇵JPY: -0.07% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/p80ihot5KY
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.00%, while traders in EUR/GBP are at opposite extremes with 67.34%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/PHdbvQq8kU
  • Copper prices may continue to push higher despite a worrying surge in Covid-19 cases and the lack of progress in Congressional stimulus negotiations. Get your #copper market update from @DanielGMoss here:https://t.co/N2OW566nID https://t.co/VJfjTNDdZI
  • The US weekly jobless claim number came in at 870k, in line with expectations. This marked a 4th consecutive weekly reading below 1 million mark, but the rate of improvement in the jobs market appeared to have slowed recently. https://t.co/7pEUQk80C8
  • What is the outlook for financial markets ahead of the first presidential debate and how are Democratic nominee Joe Biden and President Donald Trump doing in the polls? Find out from @ZabelinDimitri here:https://t.co/QQwAZTxZFg https://t.co/MSOw9DeSxe
US Dollar Breaks Out of Low Vol Slumber as Yellen Walks Policy Tightrope

US Dollar Breaks Out of Low Vol Slumber as Yellen Walks Policy Tightrope

Share:

Talking Points:

- Fed Chair Yellen suggests US economy is improving, next rate hike could come in next few months.

- However, speech leans heavily on how Fed will approach issues in the future…which hasn’t been USD-positive.

- See the DailyFX Economic Calendar for the rest of the week.

Avoid the pitfalls of trading by steering clear of classic mistakes. Review these principles in the "Traits of Successful Traders" series.

After a quiet week, the highly anticipated speech by Fed Chair Janet Yellen delivered today at the he Jackson Hole Economic Policy Symposium lived up to its billing. The USDOLLAR Index, mired in an apathetic lull the past several days, is in the midst of posting its widest daily trading range of the week on the back of Chair Yellen’s commentary.

The speech that was billed as a must-watch event by market participants as many were looking for a gauge for when the Fed might hike rates in the coming months. Indeed, even though the focus of the gathering was on the Fed’s long-term toolkit - “Designing Resilient Monetary Policy Frameworks for the Future” – Chair Yellen made clear almost immediately that the economy is approaching the Fed’s inflation and employment goals.

The tone of the remarks was somewhat upbeat and indicated that although economic growth has not been very dynamic, it is enough to sustain further improvement in the labor market. With respect to inflation, Chair Yellen reiterated that the FOMC seens inflation rising to +2.0% over the next few years. In acknowledging the limitations of monetary policy, Chair Yellen emphasized the need for fiscal policy as a complementary tool to enhance economic stability, an obvious (but politically unpalatable) fix to the low growth rut much of the advanced economic world is stuck in.

The positivity about the short-term was handicapped by Chair Yellen’s broader discussion on Fed policy, and as such, the US Dollar advance was cut short rather quickly. Chair Yellen in her addressed repeated that monetary policy is not on a pre-set course, she also underscored that Fed is not actively considering additional tools but highlighted that, in the future, it would be worth looking at a broader rage of asset purchases (QE4, anyone?).

In effect, today, Chair Yellen walked a policy tightrope, in a further attempt to only tighten policy when the US economy is in its ‘Goldilocks’ state – every is just right. Certainly, the discussion about raising rates offers an initial, hawkish hue to her speech; but the broader implication that the Fed’s cyclical peak in rates will be lower than previously anticipated – as indicated by the suggestion that the real neutral rate is near zero and that inflation won’t reach +2.0% for a few years – has hurt the US Dollar.

Chart 1: EUR/USD 1-minute Chart Intrday (August 26, 2016)

US Dollar Breaks Out of Low Vol Slumber as Yellen Walks Policy Tightrope

Indeed, as we wrote in anticipation of Chair Yellen’s speech today, it seems the conflicting nature of the commentary (hawkish short-term, dovish long-term) is leaving the US Dollar spinning on its head: a doji is forming on the daily chart. While the USDOLLAR Index may finally be breaking out of its low vol slumber, direction has yet to be found.

Chart 2: USDOLLAR Index Daily Chart (April 18 to August 26, 2016)

US Dollar Breaks Out of Low Vol Slumber as Yellen Walks Policy Tightrope

Read more: US Dollar Looks to Shake Off Low Vol with Yellen Speech Today

--- Written by Christopher Vecchio, Currency Strategist and Diego Colman, DailyFX Research

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

To contact Diego Colman, email instructor@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES