It took a few minutes but US dollar higher after Yellen
The market reaction has been modest to Yellen but the dollar has revised higher. She repeats several of her long-held beliefs about slack in the labor market. She also finishes the speech speaking about productivity and says "[on productivity] recent data have been disappointing."
The highlights of Yellen's speech touch on a few points but the most important part of the speech is here:
"If the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target and begin the process of normalizing monetary policy. To support taking this step, however, I will need to see continued improvement in labor market conditions, and I will need to be reasonably confident that inflation will move back to 2 percent over the medium term."
The gains have only amounted to about 20 pips for the US dollar. An initial selloff in bonds has also reversed, pulling yields back down to 2.20% from 2.24%.
With very little to chew on here, the market is going to go back to focusing on data. But with the US on holiday Monday, the market is about to lose liquidity very quickly.
