Yellen’s Monetary Policy Testimony

Jarratt Davis

Special Consultant to the FPA
Messages
1,495
Yellen’s monetary policy testimony will be released today 3:00pm GMT. Any comments regarding monetary policy from Yellen have the capacity to move the USD.

At their January meeting the Fed acknowledged recent global events but kept March in play regarding future hikes, any indication by Yellen to changes in this view will likely cause a reaction in the USD, however with the market currently pricing in a 0% chance of a hike next month, further downside may be somewhat limited.

Description:

Speeches from central bank officials always have the potential to cause market moves, especially if they make unexpected comments regarding future monetary policy or the economic outlook. Sometimes they will also comment on the exchange rate, and more often than not, claim that their domestic currency is too expensive.

Summary:

Federal Reserve Chair Janet Yellen is due to testify about monetary policy before the Joint Economic Committee, in Washington DC. The testimony usually comes in 2 parts; first she reads a prepared statement, a text version of which is made available on the Fed’s website immediately, then the committee will hold a question and answer session. Since the questions are not known beforehand they can make for some unscripted moments that lead to heavy market volatility.

The market will be focusing on any comments regarding the future path of rate hikes, recent market turmoil, and any new commentary regarding the outlook for the US economy. Currently the market is pricing in less then a 20% chance of a hike in 2016.

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IrwanI

Sergeant Major
Messages
518
( however with the market currently pricing in a 0% chance of a hike next month, further downside may be somewhat limited.)why it's limited Jarrat,can you explain in more detail
Thank You.
 

Dermolikesprofit

Sergeant
Messages
158
2016-02-10 16_12_18-Countdown to FOMC - CME Group.png
There is a 96.1% probability that rates will be left the same for the March 16 meeting according to the CME group FED watch. ;)
 

Jarratt Davis

Special Consultant to the FPA
Messages
1,495
( however with the market currently pricing in a 0% chance of a hike next month, further downside may be somewhat limited.)why it's limited Jarrat,can you explain in more detail
Thank You.
Irwanl, If the market isn't expecting a rate hike, comments suggesting what the markets already expects are unlikely to have a sustained reaction as the market is already correctly positioned for such an outcome.
 

IrwanI

Sergeant Major
Messages
518
Understood,simple answer from you Jarrat but really knowledgeable and easier to understand,really appreciate,you are the best.
Thank You Sir.
 
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