Good day readers.

I always liked examples of such to show that we traders are sometimes just hostages to sentiments. We had a dovish stance from the US Federal Reserve sometime back followed by hawkish comments from various officials. The EUR/USD reacted accordingly. Now with the latest comment of caution from US Federal Reserve chair Janet Yellen, we see the US dollar losing value across a number of currency pairs.

Hence I always mentioned that to succeed in forex trading, we have to understand the markets. Articles such as the one below from Bloomberg definitely help.

U.S. stocks rose, with the Standard & Poor’s 500 Index posting a 2016 high, as Federal Reserve Chair Janet Yellen signaled the central bank will be cautious on further interest-rate increases in a nod to global risks.

Equities saw the strongest gains since the conclusion of the last Fed meeting, when policy makers reduced their outlook for rate increases this year, citing negative developments overseas. The dollar repeated a post-Fed selloff, helping commodity and industrial shares to reverse losses on speculation the weaker currency will buoy earnings.

The S&P 500 rose 0.9 percent to 2,055.01 at 4 p.m. in New York, the highest since Dec. 30. The Dow Jones Industrial Average added 97.72 points, or 0.6 percent, to 17,633.11, wiping out a drop of more than 100 points. The Nasdaq Composite Index increased 1.7 percent as Apple Inc. and Microsoft Corp. rallied more than 2.1 percent. The Russell 2000 Index of small caps jumped 2.7 percent, the most in two months.

“Yellen reiterated that the Fed will proceed cautiously, and the market is finding comfort in that,” said Richard Sichel, chief investment officer at Philadelphia Trust Co., which oversees $2 billion. “There were no surprises, and surprises are what normally sends the market going the wrong way. Investors can now start to key in on some economic numbers, and then begin to look ahead to earnings.”

In a speech to the Economic Club of New York, Yellen said it is appropriate for U.S. central bankers to “proceed cautiously” in raising rates because the global economy presents heightened risks. The speech made a strong case for running […]

Click here to view original article at www.bloomberg.com

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