Central Banks are the key drivers of the markets this week as traders focused on comments made from two major central bankers; ECB Chief Draghi and Fed Chair Yellen.
Draghi commented that ‘he sees room for paring back stimulus’ this optimistic comment weighed on government bonds whereas Yellen suggested ‘that the US economy can withstand higher interest rates and that asset valuations were rich’. The markets are now looking for additional economic strategy indications from various influential policy makers that are attending a conference in Portugal that ends today.
Volatility in US equities rose the highest in six weeks as investors digested recent economic data and central bank verbiage. The IMF have suggested a less rosy outlook for the US economy dismissing the Trump administrations tax cut pledge and an increase in infrastructure spending. Additionally, traders concerns continue with Oil moving into a Bear Market, the continued sell off of Technology stocks and the cyber attack that originated in the Ukraine and spread to several Major cities late yesterday.
USD remained under pressure slipping 0.2%% against JPY to trade currently at 112.31 near the day’s high of 112.394.
EURUSD was higher, up 0.2%, currently trading at 1.1362. This after reaching a 10-month high earlier in the trading session of 1.13711.
GBPUSD also benefitted from USD weakness trading up to 1.28274 overnight before retracing back to currently trade at 1.2810.
USDCAD rose by nearly 0.5% to currently trade at 1.3138 following comments made by Bank of Canada Governor Poloz that interest rate cuts ‘have done their job and that levels are now extraordinarily low’.
WTI & Brent have both risen nearly 1% overnight to currently trade at $44.22pb and $46.90pb respectively.
Gold gained another 0.4% against USD for the second consecutive day to trade currently at $1252.
Traders will now be looking ahead to several Central Bankers speeches today – all scheduled for 16:30 BST: BoE Governor Carney, BoJ Governor Karuda, ECB President Draghi & BoC Governor Poloz. At 17:30 BST sees the release of the EIA Crude Oil Stocks Change which is always impactful on Oil prices.
