Janet Yellen, the new FED Chairman hinted at raising the US interest rates in the coming 6 months in her yesterday press conference. USD soared 1% against Yen and again 1% against Euro. Is this the start of a new dollar rally? Watch the CNBC video below!
If market fundamentals make USD bullish, it means the start of downtrend on most of the USD pairs like EUR/USD, GBP/USD, NZD/USD and an uptrend on USD/JPY. “Quantitative easing helped deal with the [financial] crisis but it has been disappointing in fostering the recovery, so the sooner the Fed abandons the policy the better,” Stephen Roach, a senior fellow at Yale University told CNBC. You can read the whole CNBC article here. What this comment means is that FED will have to raise the US interest rates sooner rather than later. Janet Yellen made this clear yesterday when asked how long it will take to raise the US interest rates. She said around 6 months. Now many analysts are saying she slipped yesterday by giving a very specific timeframe. She should have given a vague answer to keep the market guessing. Anyway the market fundamentals are demanding that FED raise the US interest rates in order to kickstart the recovery. So we will be seeing dollar getting stronger once again in the next few months. Anyway, her remark yesterday made all the USD pairs to fall around 100 pips.