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USD Declines; Cautious Tone Emerges Ahead of Fed Testimony, US National Security Turmoil

Published February 14, 2017
  • Fed Chair Janet Yellen is scheduled to testify on the economy before the Senate Banking Committee at 10am ET
  • It’s expected she will provide an upbeat assessment of the economy while most will be listening for a hint of whether there’s any chance of a rate hike in March
  • White House National Security Adviser Michael Flynn resigned Monday amid a snowballing controversy over whether he lied about his contacts with a Russian official
  • Yesterday’s first meeting of PM Trudeau and President Trump appeared to go well, with agreement on the importance of finding mutually beneficial solutions to border security and trade despite their philosophical differences
  • Oil prices bounced upward but are still trapped in a familiar range as the market weighs on the production cuts by OPEC while the US increases drilling
  • Gold prices have edged up and will likely continue to react in concert with any risk on/off tone
  • Inflation rates in the UK and China rise to multi-year highs; US inflation data expected on Wednesday
  • US producer prices jump on higher energy costs, posting a 1.6% YoY largely on expectations
  • Euro zone Q4 GDP data was revised down to 0.4%, the same as the previous month but worse than preliminary readings of 0.5%
  • US and Canadian stock futures trade sideways; the European stocks are little changed while the Asian market declined along with Japan’s sliding Nikkei index

Chart (1) Gold Prices and US Dollar Correlation – 10 Year Chart