Thursday, February 26, 2015

Volatility Dries Up on Flexible Fed

Currency volatility is poised for its biggest weekly drop since 2010 after Federal Reserve Chair Janet Yellen reiterated Wednesday that the central bank’s timetable for raising interest rates is flexible.

A gauge of the dollar remained weaker following Yellen’s testimony to a House committee, a day after she told a Senate panel that the labor market was improving even as inflation and wage growth remain too low. A measure of expected currency swings has fallen every day this week as euro-region finance ministers agreed to a package of economic measures for Greece on Tuesday. Australia’s dollar slumped after a report showed business spending declined more than analysts forecast.

“Yellen did a good job of containing markets from racing ahead” with bets for higher rates and a stronger dollar, said Satoru Igarashi, a senior foreign-exchange strategist at Mizuho Securities Co. in Tokyo. “Volatility is falling considerably.”

Bloomberg

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