Research Team at Investec, notes that the Fed Chair Janet Yellen deliver as balanced a testimony in front of the House Financial Services Committee as could have been expected. Key Quotes “Chair Yellen acknowledged the recent slowdown in activity and the tightening of financial conditions, but also highlighted the continued improvement in the labour market, as well as other upside risks. Although Chair Yellen still pointed to a gradual increase of interest rates going forward, late on in the Q+A she was questioned on the Fed’s authority to implement negative interest rates on excess reserves. The Fed Chair highlighted she was not aware of any restrictions to the Fed’s authority, and that the central bank should look more closely into the option of negative interest rates for prudent planning. The talk of looking into negative rates, although unlikely to come to pass, seems to have been enough to spook markets and the Dollar was sold after the comment - helping erase earlier US Dollar gains. The blanket selling across the board late into the testimony carried on into overnight trade. Note that Yellen is due to give testimony to the Senate Banking Committee this afternoon, but traditionally this is identical to the House testimony (3pm).” For more information, read our latest forex news.