Market Roundup
• USD slides after Yellen’s speech; stocks, US treasuries & precious metals rise.
• Fed’s Yellen: Fed held rates to get out ahead of global risks, should proceed “cautiously” given global risks, there is more slack in labor market than obvious from unemployment rate.
• Fed’s Kaplan: US consumer will remain strong, doesn’t see a recession in US in ’16, says Fed should move gradually & cautiously as doesn’t want to have to reverse course.
• U.S. home prices up in January, but shy of expectations; CaseShiller 20 y/y 5.7% vs 5/.8% forecast.
• US Conference Board cons confidence index 96.2 in March vs Feb 94.0.
• Brazil's PMDB quits coalition, isolating Rousseff; weakening her ability to stave off impeachment.
Looking Ahead – Economic Data (GMT)
• 23:50 Japan Industrial output prelim mm Feb forecast -6%, 3.7%-previous
• 23:50 Japan IP Forecast 1 Month Ahead* Feb -5.2%-previous
• 23:50 Japan IP Forecast 2 Month Ahead* Feb 3.1%- previous
• 21:45 New Zealand Building Consents Feb -8.2%- previous
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1250 levels and currently trading at 1.1300 levels. The pair has made session high at 1.1303 and hit lows at 1.1177 levels. Euro rose against US dollar on Tuesday, after Federal Reserve Chair Janet Yellen said it was appropriate for the Fed to proceed cautiously in hiking interest rates. Yellen's comments, which came after recent hawkish remarks from Fed officials, hurt the dollar by pushing out expectations for the central bank's next interest rate hike. The euro reversed earlier losses and climbed to a new session high against the dollar following the Fed's statement. Euro hit an eight-day high against the dollar of $1.1269, while the dollar slumped against the yen to a session low of 112.88 yen , easing further from a nearly two-week high of 113.80 yen hit early in the session. On the data front U.S. single-family home prices rose less than expected in January. The S&P/Case Shiller composite index of 20 metropolitan areas rose 5.7 percent in January on a year-over-year basis, matching the increase the month before. That was just below the 5.8 percent estimated by analysts.
GBP/USD is supported in the range of 1.4330 currently trading at 1.4387 levels. It reached session high at 1.4402 and hit low at 1.4362 levels. The pound rose against US dollar on Tuesday as the dollar was weighted down by dovish comments by Federal Reserve Chair Janet Yellen. The Federal Reserve chief repeated her earlier stand that the U.S. central bank would raise interest rates only gradually due to global risks. Fed Chair Janet Yellen's view contrasted with those of some top officials who in recent days said the U.S. economy is strong enough to warrant further rate increases despite uncertainty about Chinese growth and turbulence in the oil market. The currency pair in the mid-morning American hours trimmed some gains made earlier and retreated towards 1.4256 levels, however the pair was made a quick surge towards 1.43404 after dovish statement by Fed’s Janet yellen hitting daily highs. In the late New York session the pair paused to trade around 1.4386 levels.
USD/CAD is supported at 1.3030 levels and is trading at 1.3056 levels. It has made session high at 1.3210 and lows at 1.3049 levels. The Canadian dollar surged higher against US dollar on Tuesday after Federal Reserve Chair Janet Yellen said the U.S. central bank should proceed cautiously with rate hikes, while oil prices declined. The currency rose despite a drop in oil prices of some 3 percent, reflecting growing concern a two-month rally was fading as demand fails to keep up with swelling global supply. A more cautious Fed and oil holding on to recent gains could help the Canadian currency make further gains in the coming days. The currency's strongest level of the session was C$1.3049, while its weakest level was C$1.3206. January gross domestic product data is due on Thursday, with analysts expecting 0.3 percent growth for the month, which would reinforce expectations that first-quarter growth will exceed the Bank of Canada's forecast of 1 percent.
AUD/USD is supported around 0.7600 levels and currently trading at 0.7640 levels. It hit session high at 0.7646 and made session lows at 0.7606 levels. The U.S. dollar hit its lowest level against the Australian dollar in over a week and fell against other major currencies on Tuesday as comments from U.S. Federal Reserve Chair Janet Yellen weakened US dollar and boosted Aussie bulls. The Federal Reserve chief in a statement repeated her earlier stand that the U.S. central bank would raise interest rates only gradually due to global risks. Weak data on Monday, which showed U.S. consumer spending barely rose in February and inflation retreated, had already dampened expectations that a rate hike is imminent. The pair last stood at $0.7626 on the day and pulling closer towards 8-1/2 month high of $0.7681.
Equities Recap
European stock markets rose on Tuesday, as stronger insurance shares offset weaker commodity-linked stocks, which fell in tandem with lower metals and oil prices.
UK's benchmark FTSE 100 closed down by 0.1 percent, the pan-European FTSEurofirst 300 ended the day up by 0.42 percent, Germany's Dax ended up by 0.4 percent, France’s CAC finished the day up by 0.7 percent.
U.S. stocks swung into positive territory on Tuesday after Federal Reserve Chair Janet Yellen said the central bank should proceed “cautiously” on raising interest rates.
Dow Jones closed up by 0.56 percent, S&P 500 ended up by 0.89 percent, Nasdaq finished the day up by 1.69 percent.
Treasuries Recap
The U.S. Treasury market rallied on Tuesday, with benchmark yields hitting three-week lows, as the Federal Reserve chief repeated her earlier stand that the U.S. central bank would raise interest rates only gradually due to global risks.
The benchmark 10-year Treasury notes were up 18/32 for a yield of 1.823 percent, down 6 basis points from late on Monday.
The 10-year yield touched 1.817 percent, the lowest in three weeks. The 30-year bond traded 24/32 higher at 2.619 percent, down 4 basis points from late Monday.
Two-year and five-year Treasury yields touched their lowest levels in four weeks at 0.8120 percent and 1.284 percent, respectively.
Commodities Recap
Oil prices fell about 3 percent on Tuesday, reflecting growing concern that a two-month rally was fading as demand fails to keep up with swelling global supply, including new output from Kuwait and Saudi Arabia.
Brent futures settled down $1.13 at $39.14 a barrel while U.S. crude settled $1.11 lower at $38.28 per barrel.
Spot gold rebounded after touching a four-week low on Thursday, but prices were still poised for their biggest weekly loss since November as the prospect of more U.S. interest rate rises has bolstered the dollar.
Spot gold slipped 0.6 percent in early trade on Thursday to $1,212.20 an ounce, its weakest since Feb. 26, before rebounding to $1,221.95, up 0.2 percent, by 3:10 p.m. EST.U.S. gold settled down 0.2 percent to $1,221.60 an ounce.
The material has been provided by InstaForex Company – www.instaforex.com