Preview: Yellen could shift rhetoric on Tuesday (but she probably won't)

Author: Adam Button | Category: Central Banks

Yellen makes her first appearance since the March FOMC

US dollar bulls might be setting up for disappointment on Tuesday when she speaks at 1620 GMT (1220 ET) at the Economic Club of New York.

The US dollar has held a steady bid after getting beaten up following the FOMC statement and Yellen's March 16 press conference. A big reason for the rebound has been chatter from Fed members suggesting April and June are very much 'live' meetings.

To be fair, Yellen herself said the April meeting was live in the press conference but she qualified it by saying that 'every meeting was live'.

Contrast that with St Louis Fed President James Bullard who said on the weekend that "the April meeting and the June meeting are definitely live meetings, and the committee could move at those meetings, but we'll see what the data looks like at that point."

He also said the "next rate increase may not be far off provided that the economy evolves as expected," in an interview with Nikkei.

Yellen has a chance to correct her message

Yellen was seen as surprisingly dovish after the FOMC. She said that many meeting participants saw risks tilted to the downside and was especially focused on international developments.

What she didn't emphasize was that that the domestic outlook has been solid. More talk about the US economy in her speech Tuesday could give the US dollar a lift.

In contrast, the risk is that she repeats much of the rhetoric from the press conference. It's unlikely that Yellen regrets her performance or the market reaction. She's a measured Fed Chairman and appeared to be in control of her message that day.

My guess is that fast money will be looking for something upbeat or more hawkish from Yellen but she will fail to deliver.

Note that after the speech she will take questions from economist Alan Blinder and Columbia Business School Dean Glenn Hubbard.

Here is the Fed speaking schedule for the next three weeks. Note that Yellen will appear again on April 7 so if she was considering changing her tone, she's likely to wait for more data and make the shift then (when she appears with three former Fed Chairmen).

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