The US dollar spiked today against a basket of currencies, after the comments from the FOMC suggesting a possible earlier than expected rate hike in the US. Yellen’s comments were taken by some as signaling a rate hike even as early as beginning of 2015.
However, Yellen never explicitly said anything like that. Instead that the committee has replaced the simple quantitative measure of unemployment as the threshold, and said it would look at a broader array of indicators in deciding when to start raising short-term interest rates, including labor market conditions, inflation and financial conditions. Most of the FOMC members continue to believe that sometime in 2015 they will have to raise rates. Other than that they decided to continue tapering by another $10bl and blamed the labor market improvement slowdown on adverse weather conditions.
EUR/GBP Daily Chart:
The pair is testing important support at 0.8350 area. If it holds it will be another confirmation of a non-failure swing to continue higher.
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