Dollar Loses Ground On Yellen's Speech
Better than expected US jobs data last week sparked speculation that the US Federal Reserve would start to taper its $85 billion per month stimulus spending plan as early as December.
Although the US government shut down caused many to worry that the US recovery had fallen off track, data showed that effects from the closure were minimal and even suggested that the American economy was ready to stand on its own.
Bloomberg reported that Janet Yellen said the economy was performing below its potential and that inflation would likely remain below the Fed's 2 percent target in a testimony prepared for her hearing on Thursday. Yellen's speech confirmed to most that she is as dovish as markets had been expecting. The dollar slipped following her speech, as her defense of the bank's quantitative easing caused many to believe that the Fed won't taper until its March meeting.
The euro also faced pressure on Wednesday after eurozone industrial production data came in at a loss. Factory production fell 0.5 percent in September after rising 1 percent in August. The drop was larger than economists' expectations of a 0.3 percent fall.
Moving forward investors will be focused on the region's GDP data, due out later on Thursday. Many economists are forecasting GDP growth to slow to 0.1 percent in the third quarter despite strong second quarter growth.
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