U.S. Session Recap – March 20, 2014

  • Fed tapers another $10 billion from its asset purchases
  • Fed removes 6.5% unemployment threshold
  • Fed lowers growth and unemployment forecasts
  • Yellen: rates likely to stay low by around 6 months after tapering ends
  • Jim Flaherty surprisingly resigns as Canada’s Finance Minister

Market players were expecting fireworks from Janet Yellen’s first monetary policy meeting as Fed head and she sure didn’t disappoint!

The Greenback became king of pips in yesterday’s U.S. session trading after the Fed decided to remove another $10 billion from its monthly asset purchases and drop its 6.5% unemployment rate threshold. What caught the investors’ attention though, was Janet Yellen’s remarks about the Fed’s schedule for tightening its policies.

Yellen expects to see rate hikes “a considerable” time after the Fed’s tapering ends. When asked about it, she added that it would be in “six months or so.” What a coup for rate hike junkies! Not surprisingly, the U.S. bond yields soared with the Greenback while U.S. equities dropped like they were hot potatoes.

The pound was the second best performer among the major currencies as it was supported by better-than-expected U.K. jobs data. Although the BOE isn’t in any hurry to increase its rates, analysts still expect them to be one of the first ones to pull the trigger.

Perhaps the biggest loser in the currency bunch is the Loonie, which dealt with a two-punch combo of Stephen Poloz hinting at a rate cut and Finance Minister Jim Flaherty surprisingly resigning from his post. Flaherty was one of Canada’s longest-serving finance ministers. As a result, USD/CAD had blasted above 1.1200 and capped the day 108 pips higher than its open price.

We don’t have tier 1 and tier 2 reports scheduled during the Asian session save for the quarterly New Zealand GDP and RBA bulletin released a few hours ago. This means that you should keep an eye out for continuation of the last session’s moves and any news that might affect risk appetite.

Good luck and good trading!

See also:

London Session Recap

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