After a mild outflow seen with the Dollar on Thursday, the US currency regains its footing ahead of Yellen speech in Boston and the earnings reports from the key players of the US financial sector, that is due later today.
The DXY, which tracks the performance of US currency against six other majors, saw a U-turn after dipping to 97.50 level as the investors remain optimistic about the FED, gaining 0.38% during the London trading. The speech from the FED senior Janet Yellen will probably be scrutinized for hawkish cues and degree optimism towards the economic development in next year. Markets expect a rate increase in December by 25 b.p. , this has a 60% probability according to the CME futures data. There is also a slim chance of a hike by 50 b.p. although with the current FED cautiousness such shifts in policy are not likely to happen.
Investors are also bracing for a stock market turbulence as three largest players in the US financial sector are disclosing their earnings data today. Citigroup Inc. and JP Morgan reports are expected to show increased profits according to the analysts surveyed by Bloomberg while the Wells Fargo earnings report will have a crucial impact on the investment appeal with the recent step-down of their CEO and speculations of fake accounts, dragging the company shares lower.
The S&P Financials Sector ETF declined by 1.09%, as the data release about Broader Index S&P closing 0.3% lower because of the advances in the retail sector, airline shares, and utility sector.
VIX index also known as the “fear indicator” rose to a months time, signaling that the investors prefer to cut their risk exposure ahead of uncertainty.
The Asian markets closed in green today as the concerns over the Chinese growth retreats with the main inflation gauge of China beating the expectations. The Chinese CPI in September rose by 1.9% compared to the same period in the last year signaling an expansion in the largest Asian economy. The Japanese data was also positive with the Foreign Bonds and Stocks purchases topping estimates.
The Crude oil prices rose despite the mixed data released by EIA on Thursday. The reports showed that the Crude oil supplies rose by 4.9M barrels while gasoline and distillates reserves shrank. Pointing to a possibly of an increasing demand from the refineries.
The precious metals grew except for Gold, which retreats together with other safe havens such as the Japanese Yen and Swiss Franc, indicating a generally positive attitude towards the risk ahead of FED.
Amid the other emerging markets, the Russian RTS remained flat near the Thursday close, Bovespa advanced together with the Indian Nifty 50 stock gauge.
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