Daily Market Updates 19 January 2017

headlines
Headlines International
Overnight the dollar has rallied 1.1% while Treasuries plunged after Yellen signalled the Fed is ready to raise rates if the economy strengthens as anticipated.
Yellen says economy near goals, warranting gradual rate hike. U.S. economy is “close” to objectives of full employment, stable prices; Yellen confident it will continue to improve. “I and most of my colleagues” were expecting last month to increase the benchmark lending rate “a few times a year” through the end of 2019
China will build a “new model” of relations with the United States, President Xi Jinping said on Wednesday in a speech that portrayed China as the leader of a globalized world where only international cooperation could solve the big problems
Former PBoC adviser Li Daokui said that the Chinese yuan could fall by 5% in 2017, and any more than this could result in greater capital outflows.
Currencies
US Dollar clawed back most of Tuesday’s decline, getting a fresh boost from a drop in CAD and an upbeat Beige Book
USD extended gains following Yellen’s 3pm ET comments in which she said she and most of her colleagues were expecting last month a “few” hikes a year through end of 2019
USD/CAD gained the most since November after Poloz said BOC would cut rates if needed, derailing the best start to a year for CAD since it became a floating currency in 1970
Overnight GBP reversed course after the surge in the previous session, and this seems to be a correction given jitters remain regarding the Sterling.
 
Rates
The yield on US 10Y T notes rose the most in a month up 10bp to 2.42%, after Yellen said the economy is “close” the central bank’s objectives. It was the biggest advance since Dec. 14
Yields across UST curve were higher in late trading by 6bp-10bp, with about a third of the 9.8bp increase in 5Y yields coming after Yellen’s speech was released; earlier declines stemmed from December CPI, which saw core rate rise slightly more than forecast
Equities
S&P 500, which rose 0.2%, was little changed and range-bound
The Dow Jones Industrial Index was down 22.05 points to 19,804.72. The index is down almost 1 percent since Jan 6, when it climbed within one point of 20,000
MSCI Emerging Markets Index was down 0.1%, after earlier rising to the highest closing level since Nov. 8
European Stocks were little changed, with an advance in miners offsetting a drop in media shares led by Pearson; Stoxx Europe 600 Index rose 0.2%; FTSE 100 Index added 0.4%
Commodities
The Bloomberg Commodity Index halted a five-day rally, retreating 0.6%
WTI crude was down 2.2% to $51.31 a barrel, reversing earlier gains, amid concern about U.S. output
Gold futures were down 0.7%, snapping a seven-day winning streak that was the longest since November.
Regards All.
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