Not so concerned we’re going to see a rapid gain in inflation
Wants to see a few more months of good data
Says if we see very strong data the first rate hike could move forward
The Fed mob are earning their corn today doing the new channel rounds as Dennis does CNBC
The market is all central banked out right now though and there’s no effect on the dollar. US 10 year yields have fallen further to 2.41% and although off the highs, the shorter end are holding up better.
Hard to get a real grasp on the close with all that’s gone on today. There’s been no expectation in European markets to Draghi pulling a rabbit out of the hat but the threat is there. Surely he’s got to be better than Yellen, no?
In relative terms the pound is holding up fairly well but the euro looks to be in heaps of trouble.
We’ve hit the 61.8 level of the July 2013 fib having hit a low at 1.3221. That’s below the 1.3226 I have as the fib but 5 pips between different brokers and spreads is small enough that it’s a hold of the level.
EUR/USD Daily chart 22 08 2014
The euro can’t buy a bounce for love nor money so it needs all the help it can get. If we do break the 1.3220 level then 1.3200 then we could be in a whole world of pain.
As I type it’s putting in a spirited comeback and is trading 19 pips above the lows.
USD/JPY looks like it’s running out of steam and that could be from profit taking by Europe into the weekend. The bulls will want to see a close above 104.00 tonight.
Having gone over it briefly the main jist I get is that she and the Fed are watching for reasons that will see the jobs market accelerate. While she goes through the cyclical vs structural reasons it makes a case for understating the level of slack and the possible effects if slack falls.
“Of these, greater worker discouragement is most directly the result of a weak labor market, so we could reasonably expect further increases in labor demand to pull a sizable share of discouraged workers back into the workforce. Indeed, the flattening out of the labor force participation rate since late last year could partly reflect discouraged workers rejoining the labor force in response to the significant improvements that we have seen in labor market conditions. If so, the cyclical shortfall in labor force participation may have diminished.”
“A second factor bearing on estimates of labor market slack is the elevated number of workers who are employed part time but desire full-time work (those classified as “part time for economic reasons”). At nearly 5 percent of the labor force, the number of such workers is notably larger, relative to the unemployment rate, than has been typical historically, providing another reason why the current level of the unemployment rate may understate the amount of remaining slack in the labor market.”
It brings a positive note that employment will continue to gain and perhaps at a much stronger pace going forward. This had got trdaers going gung-ho for the buck now and bonds are joining in. US 10′s yield 2.43% having been up to 2.44%
USD/JPY has busted through 104 to 104.19 and the eur has been crunched back to 1.3228
USD/JPY Daily chart 22 08 2014
We’ve broken above the April highs now and that virtually gives the green light to a bigger run up towards 105
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