Janet Yellen held firm on the Fed taper and unsettled markets somewhat with her throwaway “6 months” remark.
The Fed said the change in its rate hike guidance did not mark a shift in its intentions and that it would wait a “considerable time” after shuttering its asset purchase program before pushing borrowing costs higher. Yellen, who had fielded numerous questions without a hitch, hesitated when asked what the Fed meant by “considerable.”
“I — I, you know, this is the kind of term it’s hard to define, but, you know, it probably means something on the order of around six months or that type of thing. But, you know, it depends — what the statement is saying is it depends what conditions are like.” (Reuters)
That is not a firm commitment to raise rates any time soon. More like: “We are keeping our options open”.
The Dollar Index jumped, along with Treasury yields, but only 13-week Twiggs Momentum recovery above zero would indicate a trend change; confirmed if there is a breakout above 81.50.
* Target calculation: 79.0 – ( 81.5 – 79.0 ) = 76.5
Spot gold retreated to support at $1320/ounce in response to the stronger Dollar. Breach of the rising trendline would warn of another test of primary support at $1200, while respect would signal another attempt at $1420/$1440.
* Target calculation: 1400 + ( 1400 – 1200 ) = 1600