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Here are the latest developments in global markets:
FOREX: Major currencies were trading flat during early European afternoon as investors were waiting for the new Fed chair, Jerome Powell, to make his first major appearance before the US Congress later today. Market watchers were cautious as any language twinkles could spur noise not only in forex markets but also in bond and stock markets as well. The dollar index which gauges the dollar’s strength against a basket of major currencies was last seen at 89.81 (-0.04%), while dollar/yen stood a shy below 107 key level (+0.04%). Euro/dollar gave up some gains despite Eurozone’s consumer and business composite survey delivering slightly better results in February than forecasted as concerns linked to political conditions in Italy and Germany loomed in the background. Pound/dollar changed hands at 1.3961( -0.02%), pressured by uncertainties around the future EU-UK trade relations, while trade issues were also weighing on the Canadian dollar as NAFTA talks which hold the seventh round of negotiations this week have so far led nowhere. Aussie/dollar was trading weak at 0.7840 (-0.18%), while kiwi/dollar was the worst performer, extending losses towards 0.7277 (-0.33%). The Swedish krona tumbled versus the greenback after the Swedish central bank said that weak inflation developments are a concern and any adjustments in inflation readings the upcoming months would be crucial to determine any change in the central bank’s plans to start raising interest rates. Note that forecasts are for the first rate hikes to come in the second half of the year. Dollar/ Swedish krona surged to a fresh one-month high of 8.1895 (+0.48%).
STOCKS: European stocks were heading lower in early European trading. The pan-European STOXX 600 was down by 0.14% at 1100 GMT as gains in financials and consumer cyclicals were unable to offset losses in telecommunications. The blue-chip Euro STOXX retreated by 0.29%. The Spanish IBEX 35 and the French CAC 40 fell by 0.10%, while the German DAX 30 was down by 0.18%. The British FTSE 100 and the Italian FTSE MIB were steady. US future stocks were in the green, pointing to a positive open.
COMMODITIES: Oil prices stretched lower on fears that the US production could hamper OPEC’s efforts to curb global supply. On Tuesday, the International Energy Agency Executive director Fatih Birol said that the US would likely overtake Russia as the world’s biggest crude oil producer “definitely next year”. WTI crude lost 0.41% on the day to drop to $63.65/barrel, while Brent declined by 0.19% to $67.37/barrel. Gold was steady at $1332.60/ounce.
Day Ahead: Fed new Chief Jerome Powell testimony takes the stage; durable goods & consumer confidence pending in US
The calendar will be busy in terms of economic data for the remainder of the day, however, the focus would turn to Jerome Powell and his first major speech before the House Financial Market Committee as a head of the Federal Reserve where he will address the Fed’s semi-annual monetary report.
In times of stock market volatility, Powell who will testify on behalf of the FOMC committee at 1500 GMT (the prepared statements will be published at 1330 GMT) is expected to emphasize the bullish outlook of the economy as expressed at January’s FOMC meeting minutes, but probably he will avoid any reference on how fast should interest rates rise in order to keep markets calm, deterring another round of turbulence in equity markets.
Meanwhile, the former Fed Governor, Janet Yellen, will be interviewed by her predecessor, Ben Bernanke at the Brookings institution, discussing her career, the current state of the economy and the challenges the US economy faces.
Data on durable goods for the month of January will also attract attention at 1330 GMT, with analysts expecting the headline and the core measures to slow down on a monthly basis. At 1400 GMT, the CaseShiller indices gauging house prices during the month of December will be made public, while data on consumer confidence for the month of February will be released at 1500 GMT. The consumer confidence index is expected to rise to 126.6, coming closer to November’s 18-year high of 128.6.
In Eurozone, Germany will deliver flash estimates on consumer prices for the month of February at 1300 GMT. Forecasts are for the headline CPI to inch down to 1.5% y/y, however, in monthly terms, the index is projected to jump by 0.5% after experiencing the biggest drop of 0.7% in almost two years. In Sweden, Fellow Riksbank Deputy Governor Henry Ohlsson will be discussing the Swedish central bank’s tasks and his view of Swedish and international economic developments at 1700 GMT.
Oil traders will be paying attention to the API’s weekly data on crude stocks due at 2130 GMT.
In equities, corporations continue to release quarterly earnings reports, though the markets’ focus is expected to be on what Powell has to say later on Tuesday.
Brexit developments are also gathering attention as UK PM Theresa May prepares to deliver a speech on the nation’s relationship with the EU after Brexit later in the week. In politics, NAFTA negotiations, which have entered their seventh and final round, will also be attracting interest.