Yesterday, the major currency pairs closed the trading session in different directions. Fed's Chairman Yellen said that the gradual tightening of the monetary policy will be justified. In the near future, the regulator intends to start implementing a program to reduce assets on its balance sheet. Nevertheless, the head of the Central Bank did not tell the specific terms of increasing the range of the key interest rate. The main factor is the level of inflation, which at the moment is below the Fed's target level. This Yellen's rhetoric caused a drop in the US government bonds yield.
As expected, the Bank of Canada raised the key interest rate by 25 basis points to 0.75%. The Central Bank said that the inflation slowdown was temporary. These events caused a significant demand for the Canadian dollar. The fall in the USD/CAD quotations exceeded 1.2%.
In the Asian trading session on the AUD/USD currency pair, aggressive purchases were observed. This is due to the release of positive statistics on China's balance of trade.
Market Indicators
Yesterday, the major US stock indices closed in the positive zone. SPY (SPDR S&P 500 ETF (NYSE:SPY)) increased by 0.75%.
At the moment, the 10-year US government bonds yield is in the range of 2.31-2.32%.
The Dollar Index showed a slight increase by 0.14%.
Today, we recommend you to pay attention to the economic reports from the USA:
- The number of initial claims for unemployment benefits - 15:30 (GMT+3:00);
- The producer price index - 15:30 (GMT+3:00);
- Speech by Fed's Chairman Yellen - 17:00 (GMT+3:00).