The dollar posted strong gains today after five straight days of selling that put its value against a basket of major currencies at the lowest in more than a month.
The rebound followed Yellen’s speech where she said sees rate hikes "a few times a year" as the economy continues to recover until it reached the neutral rate which she expects by the end of 2019.
On the economic front, both headline and core inflation continued to move higher in December, matching expectations and placing pressure on the Fed to move forward with policy tightening.
It was the first time since the second quarter of 2014 that both readings settled above the Fed’s 2% inflation target. U.S. industrial output was up 0.8% in December from November, official data Wednesday showed. Production was forecast to rise 0.6% month-on-month.
Meanwhile, oil prices fell to a one-week low on Wednesday as concern over increases in U.S. production offset data from OPEC’s monthly report saying that its members pumped 33.085 million barrels per day in December, down 221,000 bpd from November.
For today, the ECB is to announce its latest monetary policy decision. The announcement is to be followed by a press conference with President Mario Draghi.
Later in the day, Canada is to report on manufacturing sales and foreign securities purchases and the U.S. is to release a series of reports, including data on building permits, housing starts, initial jobless claims and manufacturing activity in the Philadelphia region.
Fed Chair Janet Yellen is to speak at an event in Stanford.
The dollar pushed higher against the sterling on Wednesday, supported by the release of positive U.S. inflation data and following hawkish comments by Fed chair Janet Yellen on the future monetary policy of the Fed.
Earlier Wednesday, the U.K. Office for National Statistics said the unemployment rate remained unchanged at an 11-year low of 4.8% in the three months to November, in line with forecasts.
The claimant count declined by 10,100 in December, compared to expectations for an increase of 5,000 people.
For today, the U.S. is to release a series of reports, including data on building permits, housing starts, initial jobless claims and manufacturing activity in the Philadelphia region.
Fed Chair Janet Yellen is to speak at an event in Stanford.
Pivot: 1.2315Support: 1.2245 1.22 1.2155Resistance: 1.2315 1.236 1.415Scenario 1: short positions below 1.2315 with targets at 1.2245 & 1.2200 in extension.Scenario 2: above 1.2315 look for further upside with 1.2360 & 1.2415 as targets.Comment: as long as 1.2315 is resistance, likely decline to 1.2245. The pair has formed a bearish channel.
Gold
Gold prices dropped from eight week highs on Wednesday, following comments by Fed Chair Janet Yellen said she sees rate hikes "a few times a year" as the economy continues to recover until it reached the neutral rate which she expects by the end of 2019.
Yellen mentioned that As the economy approaches the Fed’s objectives, it makes sense to gradually reduce the level of monetary policy support.
The precious metal fell by more than 1% on Wednesday to approach the $1200 per ounce level.
For today, the U.S. is to release a series of reports, including data on building permits, housing starts, initial jobless claims and manufacturing activity in the Philadelphia region.
Fed Chair Janet Yellen is to speak at an event in Stanford.
Pivot: 1207Support: 1199 1197 1194Resistance: 1207 1210 1212.5Scenario 1: short positions below 1207.00 with targets at 1199.00 & 1197.00 in extension.Scenario 2: above 1207.00 look for further upside with 1210.00 & 1212.50 as targets.Comment: technically the RSI is below its neutrality area at 50.
WTI Oil
Oil prices ended the day slightly lower on Wednesday, pressured by a stronger dollar even though inventories were reported better than expected.
The American Petroleum Institute said late Wednesday crude oil inventories dropped 5.0 million barrels in the U.S. at the end of last week, compared to an expected 300,000 barrels build, while gasoline supplies surged 9.75 million barrels. Distillate stocks rose 1.75 million barrels.
Earlier on Wednesday, OPEC said a surplus of global crude supplies is on the way down and will be aided by demand and a coordinated effort by OPEC and non-OPEC countries to cut almost 1.8 million barrels per day (bpd) from the market in the first half of 2017.
Official data from the Energy Information Administration will be released Thursday, amid forecasts for an oil-stock drop of 960,000 barrels.
Pivot: 51.75Support: 50.9 50.7 50.3Resistance: 51.75 52.15 52.4Scenario 1: short positions below 51.75 with targets at 50.90 & 50.70 in extension.Scenario 2: above 51.75 look for further upside with 52.15 & 52.40 as targets.Comment: the upward potential is likely to be limited by the resistance at 51.75.
US 500
The main U.S. indices traded with mixed signs on Wednesday as investors assess major news from the financial sector, with inflation moving higher and remarks from Federal Reserve president Janet Yellen indicating a more hawkish policy in the coming months.
At 16:23 GMT, the Dow Jones fell by 0.08%, the S&P 500 gained 0.07% and the Nasdaq Composite gained 0.10%.
Banks were in the spotlight on Wednesday as Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C) reported earnings that beat expectations.
In addition, JP Morgan was sued for alleged mortgage discrimination. Reports indicated that the financial institution will pay a $55 million settlement to the Department of Justice.
For today, the U.S. is to release a series of reports, including data on building permits, housing starts, initial jobless claims and manufacturing activity in the Philadelphia region.
Fed Chair Janet Yellen is to speak at an event in Stanford.
Pivot: 2258 Support: 2258 2251 2249 Resistance: 2268 2273 2277 Scenario 1: long positions above 2258.00 with targets at 2268.50 & 2273.00 in extension. Scenario 2: below 2258.00 look for further downside with 2251.50 & 2249.00 as targets. Comment: the RSI lacks downward momentum.