New favorite phrase from FED explains today’s move

Market participants have a new favorite phrase from FOMC last Wednesday.

FOMC in its latest statement mentioned that the participants are waiting for "some further improvement" in the labor market.

Market participants are reading this as FED is ready to hike rates and US labor market will just need to post some improvement so the action can be taken. No major ground breaking improvement is not necessary for the first rate hike.

Today's price action reveals that inflation is not of any concern as of now, focus is totally on labor market.

Naturally volatility reached that high, when US labor market in today's indicator (employment cost index) failed to provide "some further improvement".

Going ahead, expect higher volatility in labor market indicators and any improvement would be dollar supportive.

FXCM dollar index bounced back from key support area, however still remains fragile enough.