Fed Chair Yellen’s speech in Philly was balanced – RBC CM

Research Team at RBC Capital Markets, suggests that the Fed Chair Yellen’s much-hyped speech in Philly was balanced, resulting in the relatively flat performance for the USD, notwithstanding some volatility in and around her speech.

Key Quotes

“With regard to the shocker NFP employment gain, she warned against attaching too much significance to any single monthly report, particularly since other timely indicators from the labour market had been positive. She also highlighted that average hourly earnings in the report were a welcome indication that wage growth may finally be picking up.

Of note, Yellen was less specific about the timing of rate hikes, saying she expects that further gradual increases in the Fed funds rate will probably be appropriate. This compares to her Harvard speech on 27 May in which she said it would probably be appropriate for the Fed to gradually raise rates in the coming months.

Markets are keeping the door ajar for a rate hike on 27 July. Much depends on the next payroll report and the UK referendum on EU membership.”