Yellen’s hawkish comments reaffirm tightening

USD

The US dollar had a topsy-turvy time during Fed Chair Janet Yellen's speech as she acknowledged that the US Central Bank may have overvalued some of the figures on inflation and employment. She reiterated that officials were quite puzzled with the dip in inflation this year and reiterated that they would adjust policy to data as needed. The dollar was last up 0.35 percent against the single currency at $1.1808, after briefly strengthening to $1.1756, the strongest level since Aug. 23, immediately after Yellen’s comments. Durable goods orders and pending home sales reports are lined up next.

EUR

The common currency continued to run with the bears against its competitors as the markets focused on the aftermath the elections in Germany - the rise of the AfD party and slightly complicated coalition discussions. Political vagueness could continue to determine the direction of the currency for the next few days but the focus could return to fundamentals once a direction is established. No major reports are out from the Eurozone today.

GBP

Sterling fell for a fourth straight day on Wednesday as a broad-based bounce in the dollar prompted profit taking before UK data, which will shed some light on the health of the retail sector. Brexit remains a thorn on the pound's side and the upcoming meeting between May and Tusk should determine where the currency might be headed next. CBI realized sales data is due today and a rise from -10 to +8 is expected.

CHF

The Swiss currency continued its mixed run but managed to catch a bids with investor on rising risk off behaviour. No reports from Switzerland yesterday while the UBS consumption indicator and the Credit Suisse Economic Expectations figure. Any improvements from their earlier readings could lend more support for the franc since the Swiss National Bank has sounded less worried about currency strength recently.

JPY

The Japanese currency was able to take advantage of the pickup in risk aversion even after PM Shinzo Abe called for snap elections. North Korea's foreign minister claimed that Trump has declared war and the clash of words continues between the two nations, has kept traders on edge. As no reports due from Japan today, market sentiment may possibly be the main driver.

Gold

Gold inched lower on Wednesday, weighed down by a stronger dollar amid prospects for a December interest rate hike in the United States and ahead of the unveiling of a tax plan by Donald Trump's administration. Gold is highly-sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the greenback. A strong U.S. inflation reading could raise expectations for future rate increases. Spot gold declined 0.1 percent to $1,291.81 per ounce by 0729 GMT.

Oil

Oil prices hovered near the 26-month highs hit in the previous session on Wednesday, after U.S. oil inventories unexpectedly declined as refiners raised output and amid threats from Turkey to cut crude exports from Iraq. Brent crude for November delivery LCOc1 was up 29 cents, or 0.5 percent, at $58.73 a barrel, as of 0603 GMT. It settled down 1 percent on Tuesday, after earlier hitting $59.49, its highest since July 2015 and more than 34 percent above its 2017 low. U.S. crude for November delivery rose 34 cents, or 0.7 percent, to $52.22 a barrel, having settled down 0.7 percent in the previous session after hitting a five-month high of $52.43. Oil prices have been supported by output curbs of 1.8 million barrels per day by the Organization of Petroleum Exporting Countries (OPEC), and cuts by other major producers, although U.S. crude has lagged behind Brent amid concerns that U.S. production growth could stoke oversupply.

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.