US Dollar Index Steady, Yellen and Data in focus

Robyn Ryan
February 14, 2017

Yellen's previous Congressional testimony, just days after President Donald Trump's widely unexpected November 8 election win, made headlines when she accurately hinted that the Fed would raise interest rates "relatively soon", described an uncertain economic future under Trump and stressed that she would remain in her position for the entirety of her term, which ends at the start of 2018.

Investors are focused on testimony by the Fed's Yellen before Congress today and tomorrow in the wake of hints from other policymakers that could suggest they are leaning towards more hikes in interest rates this year than the two now priced in by markets. The Fed has said it expects to raise interest rates three more times this year. The proposals are expected to include deep tax cuts, stimulus spending, trade actions, and deregulation. If so, you can bet the Dollar will pop higher. He has characterized as "baloney" the prospect of three more rate hikes this year. The market implied probability, at around 20%, is in the middle of the 15-25% range that has held for 2017, and comments in line with those from other Fed officials would probably see this probability rise.

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