Markets Await Yellen's Testimony

On Wednesday, Gold prices declined negatively affected by a strong USD before receiving support at $1,225. The yellow metal has dropped more than $100 an ounce since last Wednesday after a rise in bond yields and a significant increase in risk appetite.

The precious metal received support yesterday as U.S. Industrial Output came flat in October. Production declined 0.2% in September, revised down from an initially estimated 0.1% rise. Despite such data, the U.S. dollar index surged yesterday and settled at 100.40 pips. 

Today, markets are awaiting Yellen's testimony, as she could probably be quizzed about the fiscal policies and the Fed’s current outlook.

Yellen’s testimony is expected to affect the Greenback if she hints for an upcoming interest hike. However, any intention to delay interest rates hike could erase all the dollar's gains achieved in the past period.

Euro failed to maintain its gains vs. USD and could be affected by Yellen's testimony in addition to the other U.S. figures which will be released today. Technically, if the fiber fails to retest and cross over the $1.07 level, then it will likely decline further to $1.05.

The UK's unemployment rate hit an 11-year low with signs of slowing employment growth. UK unemployment fell to 4.8% in the third quarter of the year, better than expected 4.9%. The British pound traded at $1.2450 and could settle during the day in anticipation of Yellen's testimony.

Oil prices settled yesterday as market weighed Russia's comments about a potential meeting with Saudi Arabia that renewed hopes for a production cut deal against a bigger-than-expected U.S. crude inventory build. WTI settled at $45.50 before touching $46.40. The crude oil is expected to stay volatile for the time being with a chance of settling above $45.

The most important economic events:

• USD Consumer Price Index (YoY) (OCT): (GMT 15:30) – Important – Forecast (1.6%) – Previous (1.5%).
• USD Consumer Price Index Ex Food & Energy (YoY) (OCT): (GMT 15:30) – Important – Forecast (2.2%) – Previous (2.2%).

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.