Janet Yellen speaks about inflation, uncertainty and monetary policy at NABE conference in Cleveland. Prepared speech seems to be a little hawkish, although she reiterates moderate approach to raising interests rates:

• FOMC still expects inflation to stabilize around 2%
• Persistently easy policy can hurt financial stability
• Low inflation likely reflects factors that should fade
• Gradual approach appropriate due to subdued inflation
• She sees risks of overheating without modest hikes over time
• Imprudent to keep policy on hold until inflation at 2%
• Uncertainty strengthens case for gradual tightening
• Fed should be wary of moving too gradually

She described in her speech a complex look at inflation, pointing that she and her colleagues may have misjudged the strength of the labour market. The degree to which longer-run inflation expectations are consistent with their inflation objective or even the fundamental forces driving inflation. Nevertheless, she sounds at least a little hawkish which should be interpreted positively for the greenback.

The dollar strenghtened immediatelly after publication of Yellen’s speech, but after that market unwounded this move. On the chart we can see a retest of two important moving averages and vicinity of important level of 1,1900. Source: xStation5