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Dollar Close To Recent Lows As Yellen Testimony Awaited

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: US Fed Chair Yellen Testifies @ 14.00 GMT

WHAT WE’RE WATCHING TODAY

Dollar Close To Recent Lows As Yellen Testimony Awaited

Janet Yellen’s appearance today in front of the Joint Economic Committee will be followed for any shifts in the Fed’s economic and policy outlook following the recent employment figures. Traders across the financial markets will be watching to see if she has a message that could alter the course for interest rates. The U.S. dollar languished close to six-month lows against a basket of major currencies today as investors braced for the possibility that dovish comments from Janet Yellen could further undermine the greenback. The dollar index sank nearly a half percent Tuesday and is now down nearly a full percent in the last week. The dollar was weaker across the board, falling against the euro, yen, sterling, Swiss franc and major emerging market currencies such as the Indian rupee and Turkish lira. The dollar index was at its lowest level since October 2012, and its lowest level against the pound since August 2009.

Frustration has been growing among some players at the dollar’s inability to move higher even after the payrolls report, as the Federal Reserve continues to scale back its bond-buying support. Market consensus seems to be forming on the view that the Fed is still a long way from raising interest rates even after it ends its quantitative easing program, which is expected later this year. Analysts expect the dollar to recover when there’s sign of inflation or a further dip in the unemployment rate.

FOMC Meeting

Brent Edges Up On Fall In U.S. Crude Stocks & Ukraine Risks

Brent Crude edged higher above $107 per barrel today after an industry report showed U.S. crude stocks declined last week, while increasing geopolitical risks in Ukraine helped put a floor under prices. Crude inventories in the United States fell by 1.8 million barrels last week, going against analysts’ expectations for a 1.4-million-barrel gain. Investors now await confirmation of the API numbers from the U.S. Department of Energy’s Energy Information Administration, which releases its more closely watched data later on Wednesday. Brent crude rose 26 cents to $107.32 a barrel by 0352 GMT, after ending the previous session 66 cents lower. U.S. crude gained 60 cents to $100.10 after the contract had settled 2 cents higher. Heightening tensions in Ukraine and the possibility of the country slipping into civil war also helped lift oil markets, as traders weighed the risk of supply disruptions from Russia, the world’s biggest oil producer.

Twitter Drops Nearly 18% As Lock-Up Period Expires

Twitter dropped sharply on Tuesday as nearly 500 million shares from company insiders became eligible to be sold. The stock fell nearly 18 percent on record volume of more than 124 million shares to a fresh all-time low since their trading debut on Nov. 7. The lock-up agreement that expired this week applied to about 470 million shares, or 82 percent of Twitter’s equity. With the stock’s recent selloff, Twitter’s current market cap is at $19 billion. Tuesday’s reaction to Twitter’s lock-up expiry was in sharp contrast to that of Facebook in late 2012. Facebook shares jumped 13 percent on Nov. 14 that year, when its lock-up expiry of roughly 800 million shares did not trigger an immediate wave of insider selling. Last week, Twitter’s net loss grew by more than $100 million in the first quarter, though the company’s operating earnings and sales topped Street expectations. Monthly active users hit 255 million, with mobile MAUs making up 78 percent of the total.

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That sums up today’s highlights! We hope you have a profitable day on the markets

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Just A Minute!

Here’s Thursday’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the markets:

Main Trading Events Of The Day: Several today including USD Core Durable Goods Orders m/m & Unemployment Claims @ 13.30 and Fed Chair Yellen Testifies @ 15.00 GMT

WHAT WE’RE WATCHING TODAY

Yellen Testifies As Weekly Jobless Claims Expected To Hold Steady

Yellen testifies before the Senate Banking Committee today with more focus expected to be on banking regulation and “too big to fail” institutions as well as the batch of bad housing data which appears to be signaling a more structural problem than just the weather effect. It is anticipated that Yellen will veer away from providing much more insight into what she thinks may be going on in the economy. The Fed has said it will consider altering short-term rates when unemployment reaches 6.5 percent - it was at 6.6 percent in January, hence there is now a problem in that it communicated a specific rate that might soon be overtaken. Fed Chair Yellen Testifies @ 15.00 GMT.

Besides Yellen’s testimony, markets will be watching durable goods orders and jobless claims, both at 13:30 GMT. American manufacturers have experienced a slowdown in orders over the past few months and the trend is likely to reflected in January’s report on durable goods. Analysts forecast a 2.5% drop in new orders for durable goods following a preliminary 4.2% decline in December.

Weekly jobless claims are forecast to hold steady at around 335,000. The number of people applying for jobless benefits has clung to a narrow range lately, suggesting little improvement or deterioration in the nation’s labour market.

The dollar was near a two-week high against a basket of its major peers before Fed Chair Yellen speaks today amid prospects the central bank will continue to scale down its bond purchases while gold extended a decline from the highest level in 17 weeks as U.S. housing data that beat estimates supported expectations the Federal Rerserve will keep to its plan to reduce stimulus.

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Oil Prices Ease Ahead Of Yellen Testimony

Oil prices eased in Asian trade Thursday as investors await a testimony by the US central bank chief for fresh clues on the state of the world’s biggest economy. “Despite the fact we saw a bit of a rally last night, crude is really still within the range of the last couple of days,” said Ric Spooner, chief analyst at CMC Markets in Sydney. “There’s a chance we’ll see it lose a bit ground from here in the short term.”

New York’s main contract, West Texas Intermediate (WTI) for April delivery, was down 23 cents at $102.36 in mid-morning Asian trade, while Brent North Sea crude for April was 15 cents lower at $109.37. Equity markets as well as oil prices were boosted after Yellen’s inaugural testimony to House representatives on February 11 when she said the bank would continue its market-friendly, low-interest rate policies. The US Department of Energy’s weekly petroleum stockpiles report Wednesday showed commercial crude oil supplies rose only 100,000 barrels last week, one-eighth of what analysts expected.

Google Denies $10 Billion Bid For WhatsApp

Google has reportedly denied rumours that it approached WhatsApp for an acquisition before Facebook grasped the opportunity. It was rumoured that Google had offered a reported 10 billion dollars, almost half of Facebook’s 19 billion dollars for WhatsApp, according to reports. Although, there had not been any formal bid from Google, it doesn’t necessarily mean that the search giant wasn’t interested in a deal as media reports had earlier pointed out that WhatsApp was asking Google for 1 billion dollars. There were also indications that Google CEO, Larry Page met with WhatsApp co-founder and CEO Jan Koum in an attempt to convince him not to hook up with Facebook CEO Mark Zuckerberg. Usually, there’s no smoke without fire, so even if these ‘rumours’ were to a lesser or greater extent false, it will be interesting to observe Google’s moves towards other messaging apps in the market.

That sums up today’s highlights. Keep an eye on all upcoming important trading events via Facebook, Twitter, Google+ and LinkedIn. We hope you have a profitable day on the markets!

 

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Will Arctic Energy Break The Ice?

The International Energy Agency estimates that global energy demand will grow by one-third between now and 2035. Could the Arctic hold the key to help fufill that demand?

With the impact of global warming and the polar ice cap melting, the Arctic is becoming increasingly accessible. A new report from the Eurasia Group estimates that over the next 10 years, the oil and gas industry will invest up to $100 billion in Arctic energy projects.

The Arctic, which the report dubs “the final frontier of conventional hydrocarbon development,” contains an estimated 30 percent of the globe’s untapped gas reserves and 13 percent of untapped oil reserves which equates to 1,670 trillion cubic feet of natural gas and 90 billion barrels of oil, according to estimates by the U.S Geological Survey.

According to the report, accessing these resources and bringing them to market could, however, require around another 20 years so the impact of any potential Arctic energy boom won’t be felt instantly. The Eurasia Group also points out that lining up these resources as the next major source of global energy supply following the shale oil and shale gas boom will require substantial investment.

Energy exploration projects also tend to accompany potential environmental risks and geopolitical tensions, so tapping the Arctic’s energy will undoubtedly present similar issues from pressure groups who may try to ‘freeze out’ companies involved in energy exploration and development. However, those in the know think concerted development efforts are imminent. With a soaring demand for global energy that needs to be fulfilled, could Arctic energy break the ice?

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Crude Prices Fall to 4-Month Low as Production Hits 24-Year High

Crude oil price is hovering dangerously over its four-month low price as futures rose 1 mere cent above the lowest close since June. With investors speculating that U.S. stockpiles have increased for a seven consecutive week, outlook does not appear to be improving for West Texas Intermediate, which has vacillated between gains and losses four the last four months.

With the U.S. economy, and the global one by consequence, on the rocks last month over the partial government shutdown and the Fed’s meeting tapering or extension of quantitative easing pumped into the nation’s economy, investors look forward to tomorrow’s release of supply data by the Energy Information Administration to assess demand levels in the world’s biggest consumer of oil.

Last week’s production reached a 24-year high while crude stockpiles expanded by 2.2 million barrels to 386.1 million. WTI for December delivery was at $94.50 a barrel in electronic trading on the New York Mercantile Exchange, down 12 cents, at 4:26 p.m. Singapore time. It closed at $94.61 on Nov. 1, the lowest since June 21. The volume of all futures traded was about 48 percent below the 100-day average.

Concerns that the U.S. government’s 16-day shutdown put a drag on economic growth and hampered oil demand has been keeping traders on their toes as they await the release of other key economic data later in the week that might shed more light on the Fed’s true stance towards its $85 million bond-buying programme after officials said they would proceed with the curtailing of the stimulus upon receiving more indicators of strengthened economy.

Third-quarter’s preliminary economic growth to be released on Thursday and the highly anticipated Non-Farm Payrolls report scheduled for Friday (delayed 7 days due to last month’s halt in government operations) will play an important role not only on investor sentiment, but also on the Fed’s decision regarding economic stimulus at its next meeting in December.

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Loonie Falls Along With Crude

The Canadian dollar slipped against all of its major peers as crude oil, Canada’s biggest export, fell to nearly a four-month low and a reduction on western Canadian oil reached its highest level since January.

Bottlenecked pipelines in the Alberta province gave rise to worries that production will be hampered against competing grades, consequently weakening the currency from the strongest position it held versus the U.S. dollar in over a week. The news comes after a rise in the gauge of consumer consider had risen for the first time since September with improved outlooks on real estate prices and job security.

Western Canada Select is facing its biggest gap against West Texas Intermediate with the discount increasing to $40.75 per barrel, its biggest gap since 14th January. In December of last year the difference had hit record levels at $42.50 while the average for 2013 stands at $23.39.

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