Global macro overview for 23/10/2017:
In her Saturday speech on «Monetary Policy Since the Financial Crisis» at a National Economists Club dinner in Washington, D.C., the Federal Reserve Bank Chairperson Jannet Yellen commented the inflationary pressure issues. She said, that the lack of inflation has been an unexplainable «surprise,» while the Fed’s removal of stimulus is «working well»:»»We’ve had a series of weak, soft readings on inflation, core inflation, beginning in March and the reasons for that are not immediately clear,» Yellen said. Reasons for low inflation were «pretty understandable until this year. This year has been a surprise.»Despite this kind of comments, Yellen did not mention any specific changes to the monetary policy and she did not want to comment on speculation whether she will be reappointed as Fed Chairperson again.
The lack of the inflationary pressures in 2017 might sound disturbing as the financial markets participants still expected the Fed to hike the interest rate for the third time in December this year. On the other hand, the process of removing the accommodation that had started last month is working well and unconventional monetary policy tools the Fed used in an effort to stimulate the economy in the wake of the financial crisis would remain an option for the central bank if needed.
Let’s now take a look at USD/CHF technical picture at the daily time frame. The price has managed to break out above the 61% Fibo at the level of 0.9840 and currently is trading above 200 DMA and above the technical resistance at the level of 0.9856. The next target is 78% Fibo at the level of 0.9954, but the market conditions are overbought already.