Yellen: ahead of the testimony
The Fed’s Chair Janet Yellen will testify to the Congress today and tomorrow at 14:00 GMT. The discussion will probably be about the period low interest rates, inflation outlook and the possibility of a guideline to the central bank’s decisions on interest rates.
According to Deutsche Bank, Yellen’s prepared remarks will largely reflect the economic assessment of the FOMC at its June meeting. Her comments could be “modestly more upbeat,” reflecting recent improved data, and “she will acknowledge that progress has been made.” Because her remarks reflect the views of the full FOMC, “there is a risk she is less dovish than what the financial markets assume are her underlying views.”
Still, however, Yellen is likely to emphasize the need to keep interest rates near 0 for a considerable period. The Fed expects to tighten only in the middle of 2015. The economic situation remains uncertain and the regulator probably won’t share much information. As a result, USD bulls might get disappointed by Yellen’s comments, while higher yielding currencies like Australian dollar increase.
Also don’t miss other important data due in the US today: