Global macro overview for 28/08/2017:
No real breakthrough in Jackson Hole after two-day symposium ended. The Fed Chairperson Jannet Yellen speech last Friday was focused mainly on defending the regulatory action taken in response to the 2007 financial crisis. She did not address the current economic and monetary policies. She disagreed with the position of President Donald Trump and Congressional Republicans that the regulatory burden is strangling lending and has handicapped the US economy. The Dodd-Frank Act, which was introduced in 2010 by Obama administration, had been repeatedly criticized by Trump during his election campaign. This regulatory action was broadly defended by Yellen, who argued, that many of the changes that the act had initiated had made the financial system safer."The balance of research suggests that the core reforms we have put in place have substantially boosted resilience without unduly limiting credit availability or economic growth," she said during her speech.
Despite the fact that Jannet Yellen did not comment the current Fed monetary policy, the market participants have received very important news, regarding the future of Yellen as a Fed Chairperson. Her term finishes in February 2018, so the next Fed Chair will be introduced shortly. Because her point of view regarding the banking system is directly opposite to the Trump's point of view, her chances for the next term appointment has shrunk drastically after Jackon Hole speech.
Some investors feared that Yellen would use the opportunity to tighten up the rhetoric and warn the markets of excessive optimism and a further increase in risk appetite. Because none of this has happened, the market participants have resumed the trade that has been in force for weeks and further sold the US Dollar across the board.
Let's now take a look at the US Dollar Index technical picture at the H4 time frame. The price has broken below the technical support at the level of 92.54 and now is heading towards the next important support at the level of 91.93. As long as the golden trend line is violated, the outlook remains bearish.
