Janet Yellen testified yesterday for the first time as Chairwoman of the Federal Reserve. She stated that the Fed will most likely continue to taper the monetary stimulus if incoming information supports the expectation of continued improvement in the labor market conditions and if inflation continues to move back toward its objective. That said, purchases are not on a preset course; too many Americans remain unemployed and inflation is still below the longer-term objective. During the press conference she then stated that current economic conditions are very unusual and that following rule based policy has become difficult. She supported Quantitative Easing saying it has added momentum to economic recovery and that the unemployment rate declined during the QE period. She concluded that if the outlook changes noticeably the Fed will reassess what is appropriate and could choose to pause the taper. US stocks soared following the release. At the close of the US session the S&P 500 had gained 1.11% and the Dow Jones had gained 1.22%. Asian stocks also rose and were boosted further after the Chinese Trade Balance beat expectations. They finished broadly higher; the Hang Seng added 1.47% while Japan’s Nikkei 225 added 0.56% and China’s Shanghai Composite added 0.30%. European markets have also opened higher. Traders should focus on European Industrial Production at 10.00am (GMT) and the Inflation report from The Bank of England at 10.30am (GMT).
WTI Crude extended its gains after the API showed stockpiles of Crude and Gasoline to decrease. The cold snap in the US is continuing to boost demand and also pushing prices higher. The Energy Information Administration will report inventory levels from the US at 3.30 pm (GMT). Gold reached a 3 month high yesterday before declining slightly. Yellen’s comments that monetary policy will remain accommodative caused the US Dollar to drop pushing Gold higher. Physical demand is now lower due to the high price so we may see a further drop.
Today’s Main Events:
10.00 GMT: EUR – Industrial Production – measures the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities
10.30 GMT: GBP – BoE Gov Carney Speaks – As head of the BOE’s Monetary Policy Committee (MPC) which controls short term interest rates, Carney has more influence over sterling’s value than any other person.
10.30 GMT: GBP – BoE Inflation Report – The Bank of England (BOE) Inflation Report sets out the detailed economic analysis and inflation projections upon which the bank’s Monetary Policy Committee bases its interest rate decisions and presents an assessment of the prospects for U.K. inflation over the following two years
13.45 GMT: USD – FOMC Member Bullard Speaks – Federal Reserve Bank of St. Louis President and FOMC voting member James Bullard is to speak. FOMC members are responsible for setting the benchmark interest rate and their speeches are closely watched for indications on the future possible direction of monetary policy
15.30 GMT: EUR – ECB President Draghi Speaks – Due to speak at the European Monetary Institute’s “Progress through Crisis” Conference organized by the European Central Bank and National Bank of Belgium, in Brussels
February 12, 2014 – Daily Market News
Today’s Hot Assets: EUR, GBP
Janet Yellen testified yesterday for the first time as Chairwoman of the Federal Reserve. She stated that the Fed will most likely continue to taper the monetary stimulus if incoming information supports the expectation of continued improvement in the labor market conditions and if inflation continues to move back toward its objective. That said, purchases are not on a preset course; too many Americans remain unemployed and inflation is still below the longer-term objective. During the press conference she then stated that current economic conditions are very unusual and that following rule based policy has become difficult. She supported Quantitative Easing saying it has added momentum to economic recovery and that the unemployment rate declined during the QE period. She concluded that if the outlook changes noticeably the Fed will reassess what is appropriate and could choose to pause the taper. US stocks soared following the release. At the close of the US session the S&P 500 had gained 1.11% and the Dow Jones had gained 1.22%. Asian stocks also rose and were boosted further after the Chinese Trade Balance beat expectations. They finished broadly higher; the Hang Seng added 1.47% while Japan’s Nikkei 225 added 0.56% and China’s Shanghai Composite added 0.30%. European markets have also opened higher. Traders should focus on European Industrial Production at 10.00am (GMT) and the Inflation report from The Bank of England at 10.30am (GMT).
WTI Crude extended its gains after the API showed stockpiles of Crude and Gasoline to decrease. The cold snap in the US is continuing to boost demand and also pushing prices higher. The Energy Information Administration will report inventory levels from the US at 3.30 pm (GMT). Gold reached a 3 month high yesterday before declining slightly. Yellen’s comments that monetary policy will remain accommodative caused the US Dollar to drop pushing Gold higher. Physical demand is now lower due to the high price so we may see a further drop.
Today’s Main Events:
10.00 GMT: EUR – Industrial Production – measures the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities
10.30 GMT: GBP – BoE Gov Carney Speaks – As head of the BOE’s Monetary Policy Committee (MPC) which controls short term interest rates, Carney has more influence over sterling’s value than any other person.
10.30 GMT: GBP – BoE Inflation Report – The Bank of England (BOE) Inflation Report sets out the detailed economic analysis and inflation projections upon which the bank’s Monetary Policy Committee bases its interest rate decisions and presents an assessment of the prospects for U.K. inflation over the following two years
13.45 GMT: USD – FOMC Member Bullard Speaks – Federal Reserve Bank of St. Louis President and FOMC voting member James Bullard is to speak. FOMC members are responsible for setting the benchmark interest rate and their speeches are closely watched for indications on the future possible direction of monetary policy
15.30 GMT: EUR – ECB President Draghi Speaks – Due to speak at the European Monetary Institute’s “Progress through Crisis” Conference organized by the European Central Bank and National Bank of Belgium, in Brussels
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