Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the financial markets:
Main Trading Event Of The Day: USD Fed Chair Yellen Testifies @ 14.00 GMT
WHAT WE’RE WATCHING TODAY
Dollar Holds Gains In Advance Of Yellen Testimony
The dollar remained higher against the yen following its biggest one-day advance in a week as Federal Reserve Chair Janet Yellen is due to testify before U.S. lawmakers. A gauge of the U.S. currency advanced surrounding bets that Yellen will provide additional clues as to when the central bank will raise interest rates for the first time since 2006. The yen was little changed as the Bank of Japan maintained record monetary stimulus.
Yellen is likely to emphasise the need to keep interest rates near zero for a considerable period even after a report this month showed unemployment fell to an almost six-year low. She may also say that while the jobless rate has fallen faster than the Fed expected, the presence of part-time and discouraged workers and long-term unemployed represents a reservoir of potential supply and accounts for wages not growing rapidly at all, which will probably justify the message that the Federal Reserve is in no rush to begin to raise interest rates. Regarding the inflation outlook, while unemployment fell to 6.1 percent last month and inflation has risen closer to the Fed’s 2 percent target, analysts believe there is still too much uncertainty for her to change the tone materially.
The dollar rose 0.1 percent to 101.59 yen at 1:52 p.m. after strengthening 0.2 percent yesterday, the most since July 3. The U.S. currency was unchanged at $1.3619 per euro. The yen traded at 138.37 per euro from 138.28 yesterday. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 of its major counterparts, climbed less than 0.1 percent to 1,007.13.
Gold Retains Sharp Losses Trading Close To 4-Week Low
Gold was trading near its lowest level in almost four weeks on Tuesday, as sharp overnight losses triggered by profit-taking and stronger global equities dented the metal’s safe-haven appeal. Spot gold was little changed at $1,306.75 an ounce after sliding more than 2 percent on Monday - its biggest daily drop since December. Gold touched a low of $1,302.90 in the previous session, its weakest since June 19. Gold had climbed to a near four-month high of $1,345 last week as financial troubles at Portugal’s top bank rekindled fears of another euro zone banking crisis, although those fears have now subsided. Investors will be monitoring Federal Reserve Chair Janet Yellen’s testimony in a U.S. Senate committee later today for signs of when the U.S. central bank would begin increasing interest rates. They will also be watching developments in the Middle East and Ukraine for any escalation in violence that would create fresh safe-haven demand for gold amid reports that Moscow is once more building up its troops on its joint Ukraine border.
European Shares Set For Pullback; Yellen In Focus
European shares are on track for a slightly lower open today, pulling back slightly from yesterday’s gains as investors remain cautious before earnings season and Federal Reserve Chair Janet Yellen’s testimony today. The FTSE is called down 5 points at 6,741 while the German Dax is seen lower by 8 points at 9,775. Stocks in Europe saw healthy gains in the previous session as earnings from U.S. bank Citigroup and merger activity surrounding pharma firm Shire sent bourses higher. However, investors look set to hold off before any more buying with a number of data due on Tuesday. June inflation data is out for the U.K., while Germany also receives its widely watched ZEW economic index. Central bank policy makers are also set for meetings today. In addition to Yellen’s two-day testimony, Bank of England Governor Mark Carney is due in front of U.K. lawmakers for a financial stability discussion. Both appearances will be an opportunity for investors to gauge the future direction of monetary policy in each country with both expected to start raising benchmark interest rates in the not-too-distant future. Elsewhere, U.K. Prime Minister David Cameron is expected to announce wide-ranging changes to the lineup of its decision-making body called the Cabinet. Foreign Secretary William Hague is currently the biggest name set to be given a new role in the reshuffle.
That sums up today’s highlights! It’s a busy day on the financial markets so remember to keep posted via our Facebook, Twitter, Google+ and LinkedIn pages. We hope you have a profitable day on the markets.
