Susan Colins, chairman of the Federal Reserve in Boston, commented today on the situation in the US economy. In general, Collins suggested that rates may rise although at the same time she expects a slowdown. At the same time, the U.S. Senate confirmed Philip Jefferson as Fed vice chairman with strong bipartisan support.
- The rise in yields may reflect the view that interest rates may remain high for longer
- I still expect some economic slowdown in the coming months.
- I don't think we've hit the target for curbing inflation yet.
- Continued restrictive monetary policy should further moderate demand to better balance it with supply
- I expect that we will have to keep interest rates at restrictive levels for some time to come
- While we may be close to or even at the top, further tightening may be warranted, depending on incoming data
- This phase of monetary policy requires patience and careful, proper analysis of data.
- Strong demand relative to supply has been a key driver of higher inflation
Looking at the chart of EURUSD on the D1 interval, we can see that the upward trend line was already broken in the spring, and the gains in July, above 1.12, also stopped at its extension. Currently, the Fiboncci abolition levels indicate a likely test of 1.06, and although Ignazio Visco of the ECB indicated today that it is not true that supply is behind Fed policy - it seems that bankers, in the face of weakening macro data in Europe, have much less room for further increases than the Fed. 
Source: xStation5
