Dollar's retreat yesterday was brief as the greenback was lifted by comments from Fed chair Janet Yellen again. In short, Yellen said she still expected a 2015 liftoff in interest rate form the current near zero level. She noted that "most FOMC participants, including myself, currently anticipate that achieving these conditions will likely entail an initial increase in the federal funds rate later this year, followed by a gradual pace of tightening thereafter." She sounded up beat on the economy and said it's "no longer far away from full employment". However, she also acknowledged that "inflation has continued to run below the Committee's objective over the past several years, and over the past 12 months it has been essentially zero."
Meanwhile, she also sounded cautious saying that "recent global economic and financial developments highlight the risk that a slowdown in foreign growth might restrain U.S. economic activity somewhat further." And, "we cannot be certain about the pace at which the headwinds still restraining the domestic economy will continue to fade." Thus, "if the economy surprises us, our judgments about appropriate monetary policy will change."
In Japan, national CPI core dropped to -0.2% yoy in August, below expectation of -0.1% yoy. Tokyo CPI core dropped to -0.2% yoy in September, inline with consensus. Corporate service price index rose 0.7% yoy in August. That's the first negative reading in national CPI core since April 2013, when BoJ governor Haruhiko Kuroda launched the massive asset-buying program. The weak inflation also points to risk of drag down by China's slowdown. And BoJ could be forced to expand easing again soon.
Looking ahead, Eurozone M3 US GDP final and U of Michigan sentiment final will be release later today.