Global financial markets anticipated a keynote speech by US Fed Chair Janet Yellen at an annual economic policy symposium at Jackson Hole. Investors were riveted to her remarks searching for clues or a message about the Fed’s agenda on interest rates. However, they did not find out any plans until the year end.
Being discouraged by lack of information, traders set about selling the US dollar. The Fed Chair expanded entirely on a condition of the financial system and its regulation. The policymaker stated that the crisis triggered reforms which made the financial system safer. Importantly, she praised post-crisis bank rules and the performance of Obama’s administration but disagreed with the stance of President Donald Trump and Congressional Republicans. They insist that the regulatory burden is disrupting lending. Nevertheless, market participants were disappointed that Janet Yellen did not drop any hints about the Fed’s plans on further monetary policy. The Fed Chair evaded speaking on the nearest rate hike that came as no surprise. However, the policymaker was widely expected to provide clues to the timing of scaling back the Fed’s bloated balance sheet.
Investors’ response was predictable. Market participants followed the beaten path and opted to sell the greenback. This strategy pushed the US currency down. So the US dollar is rapidly losing ground and analysts do not foresee weighty reasons for a rally.
