Janet Yellen: The United States economy is ‘performing well’

USD/JPY remained buoyant but fell back a bit from the 121.72 spike high of Wednesday when it rallied on Fed Chair Janet Yellen’s remarks that raised the chances of a rate hike by the Federal Reserve in December.

USA nonfarm payrolls climbed by 271,000 in October, much stronger than expectations, according to the Labor Department’s monthly report on Friday.

Russ Mould, investment director at AJ Bell said: “A bumper non-farm payrolls figure of 271,000 demolishes the consensus estimate and paints an upbeat picture of the United States economy, especially as wage growth crept higher to 2.5%”.

Spot gold fell to $US1,103.90 an ounce, its weakest since September 16 earlier and was down 0.2 per cent at $US1,105 by 2.28pm EST (0528 Friday AEDT).

FXCM Dollar index is now trading at 12120, its highest level since April this year.

“At this point, I see the US economy as performing well”, Yellen told the House Financial Services Committee.

The British pound fell 1.2 percent on Thursday, its biggest drop since late August, after the Bank of England’s governor dismissed the view it would raise interest rates shortly after the Fed.

The Fed’s benchmark rate has been at record lows since 2008 to stimulate the economy and create jobs. That alone could be enough to cause the Fed to move on a rate hike this December, as Yellen herself hinted at.

“The dollar is being bought gradually, with markets pricing in the rate increase as data come out and yields rise”.

US stock index futures were marginally higher on Wednesday ahead of the release of a fresh batch of economic data, including a report on job growth in the private sector. “While these mandates are expressed at an aggregate national level, it is important for policymakers to understand how they impact different groups of individuals across the country”, Dudley said Wednesday, adding that in addition to monitoring macroeconomic conditions in the country, “micro-level” economic data should also be closely understood.

“Price action is very bearish, but we expect to find initial support at the October low of $1,105 and the September low of $1,100”, ScotiaMocatta analysts said.

“The continuous reiteration by the Fed, and the clear indication by its chairwoman Janet Yellen that “December would be a live possibility” would finally change the market’s expectation on the interest rate hike”, MIDF Research said in its note on Thursday.