Will Yellen’s speech impact USD?


24 September, AtoZForex.com, Amsterdam — The forex market has been quite stable overnight, with the USD trading on a softer footing, prior today’s lecture from Fed Chair Yellen. The speech is held at the University of Massachusetts, starting at 21:00 GMT. Yet, the main question traders are asking is: “Will Yellen’s speech impact USD?”

Yesterday, BNP Paribas already pointed out the potential effect of today’s lecture of Fed Chair Janet Yellen. Considering that the lecture is titled “Inflation Dynamics and Monetary Policy”, prompting investors to look for cues that may signals the timing of rate hikes. According to BNP the Fed Chair might reveal today the: Conditions under which the Fed will feel sufficiently confident to start raising rates.”

One of Japan’s largest banks the BTMU, which is the abbreviation for the Bank of Tokyo-Mitsubish, foresees that today’s lecture of the Fed Chair will be: “Scrutinized closely to see whether she provides any signal of whether she agrees with the majority of FOMC participants that they should still begin to raise rates this year.” Yet, the question still remains: will Yellen’s speech impact USD?

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2 probable scenarios for Yellen’s speech 

The BTMU draws two potential scenarios for the lecture of Janet Yellen. First off, the USD will: Likely weaken modestly if Fed Chair Yellen provides a more dovish signal which further increases the likelihood that the Fed could delay raising rates until next year.”

On the other hand, BTMU clarifies: “The content of the speech could be entirely academic and fail to provide any clear signal over the outlook for Fed policy having limited impact on the US dollar.”

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