"It's important not to remove support, especially when the recovery is fragile and the tools available to monetary policy, should the economy falter, are limited given that short-term interest rates are at zero"
- Janet Yellen, the nominee to be chairman of the Federal Reserve
While the Eurozone expanded less than expected in the third quarter, U.S. data disappointed as well, whereas Janet Yellen's statement was supposed to make markets more volatile. Nevertheless, the EUR/USD moved just slightly higher, after a set of data from the world's largest economy.
The number of Americans filing new claims for jobless benefits fell to 339,000 last week, while the fact that prior's week figure was revised is suggesting the labour market recovery remains gradual. The less-volatile four-week moving average fell 5,750 to 344,000. Furthermore, U.S. trade gap widened 8% from August, hitting $41.8 billion, as exports plunged 0.2%, while imports, in contrast, advanced 1.2%. Amid weak demand from Europe, Japan and developing economies, demand for U.S.-produced goods decreased, and led to a third-straight month of expanding trade gap.
It was expected that volatility would be experienced during Janet Yellen's testimony; however, markets were relatively calm. Even though, the next Fed Chairman has received her "helicopter pilot's license", by saying the central bank should not remove the stimulus yet. Her comments come at a critical moment for the monetary policy, as the Fed is considering winding up its QE. Yellen also pointed out that stimulus has made a meaningful contribution to the growth and hence, improved the outlook.
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