Fed's Yellen comments add pressure to markets

Thursday, March 20, 2014

The US Federal Reserve will possibly end its QE bond-buying program this autumn and could begin increasing interest rates around six months later, according to Fed Chairwoman Janet Yellen at her first FOMC meeting. There was a negative reaction across the US and Asian equity markets, which plunged and posted heavy losses following her comments, while the USD index surged to reach 80.11 area. In the US, the Dow Jones index retreated sharply more than 0.7% and the S&P 500 index plunged by 0.61%, spreading a bearish tone across the Asian equity markets. The Nikkei index tracked the downtrend and fell sharply by 1.65%, while the Hang Send index also posted heavy losses ending 1.79% lower.

European equity markets have been under pressure in early trade this morning, following the general downside momentum from the US and Asia. The euro has been consolidating around 1.382 against the US dollar, while the release of the German Producer Prices could provide further direction.

Oil: Brent front month futures have been under pressure in early trade this morning, trading below $106 per barrel, as Yellen suggested interest rates could increases earlier than initially expected.

The People's Bank of China has fixed the onshore Renminbi rate at its weakest level since November, suggesting the currency will continue to depreciate and possibly cause further concerns for investors who had bet on constant currency appreciation.

Coffee: Arabica coffee futures plunged 3% on Wednesday, extending sharp losses and sinking further from last week's two-year high as forecasts for rain in Brazil attracted investor selling, while raw sugar edged higher.

 

XAU - Gold Chart 2 years

XAU Curncy (Gold Spot   $_Oz )  D 2014-03-20 08-47-16

 

Brent Chart 2 years

CO1 Comdty (Generic 1st 'CO' Fut 2014-03-20 08-48-28

Events for today:

 

0700

DE

Feb

PPI

0930

UK

Feb

Retail Sales

1230

US

w/e

Jobless Claims

1400

US

Feb

Existing Homes Sales

1400

US

Mar

Philly Fed

1400

US

Feb

Lead Indicators

1530

US

w/e

EIA Nat Gas

 

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Economic Market Calendar

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