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23 Feb 2015
Yellen’s testimony could lead to heavy market volatility – MarketPulse
FXStreet (Barcelona) - Dean Popplewell, Director of Currency Analysis at MarketPulse, comments that the question and answer session post Yellen’s testimony by the Senate might make for some unscripted moments which could fuel heavy volatility in the markets.
Key Quotes
“Ms. Yellen’s testimony this week will have the market eyeing comments regarding international developments, a strong USD, jobs data and cooling inflation. The Fed Chair is due to testify on the Semiannual Monetary Policy Report before the Senate Banking Committee, in Washington DC starting Tuesday.”
“After reading a prepared statement the committee will hold a question and answer session. Since the questions are not known beforehand they can make for some unscripted moments that potentially could lead to heavy market volatility.”
“The market is expecting that Ms. Yellen will likely emphasize that the Fed remains data dependent. Investors and dealers continue to look for clues on rate hike timing.”
“There is a possibility that Yellen may also hint at whether “lift-off” happens as soon as the June FOMC.”
“If she conveys confidence that the Fed can normalize policy in June, treasury yields and the USD should be capable of finding a bid. If tightening hints are coupled with a bullish economic outlook, the hit to global equities could be limited.”
“The challenge will be for EM currencies already at or near record low levels outright.”
“If on the other hand, Yellen emphasis Fed patience while assessing other developments, expect the USD to suffer and correct lower while U.S equities in particular should be capable of finding a bid.”
Key Quotes
“Ms. Yellen’s testimony this week will have the market eyeing comments regarding international developments, a strong USD, jobs data and cooling inflation. The Fed Chair is due to testify on the Semiannual Monetary Policy Report before the Senate Banking Committee, in Washington DC starting Tuesday.”
“After reading a prepared statement the committee will hold a question and answer session. Since the questions are not known beforehand they can make for some unscripted moments that potentially could lead to heavy market volatility.”
“The market is expecting that Ms. Yellen will likely emphasize that the Fed remains data dependent. Investors and dealers continue to look for clues on rate hike timing.”
“There is a possibility that Yellen may also hint at whether “lift-off” happens as soon as the June FOMC.”
“If she conveys confidence that the Fed can normalize policy in June, treasury yields and the USD should be capable of finding a bid. If tightening hints are coupled with a bullish economic outlook, the hit to global equities could be limited.”
“The challenge will be for EM currencies already at or near record low levels outright.”
“If on the other hand, Yellen emphasis Fed patience while assessing other developments, expect the USD to suffer and correct lower while U.S equities in particular should be capable of finding a bid.”