Stock markets rallied on the run up to Janet Yellen’s testimony to Congress, but there has been a small pullback after the Fed chair stated the US central bank is still planning to hike rates at a slow and gradual pace. Ms Yellen expressed concern for the large declines in global equity markets and the account of the Chinese economic slowdown, and stated the conditions for growth are no longer receiving that same support they once did.
The mixture of dovish and hawkish language left some equity traders wondering which way to turn but overall investors were reminded that the Fed want to continue on the interest rate hiking path, but rates are unlikely to change any time soon. The US 500 will need to retake 1872 before traders can be confident the rally since Monday evening will last. While Wall Street remains below 16,265, we could see a move to the downside.
The US dollar moved higher thanks to Janet Yellen’s testimony to Congress this afternoon and EUR/USD was one of the biggest fallers on the back of it. The currency pair is still in its upward trend and while it holds above the support at €1.1145, a move back towards €1.13 is possible. A big pullback in EUR/USD may find support at €1.1086.
Gold is still in positive territory but it is finding it hard to move higher after Janet Yellen’s comments about the interest rates in the US. The confirmation that the Fed is still aiming to raise rates this year is preventing the metal from retesting the recent high, but by the same token the bears are still waiting on the sidelines. The $1200 mark still remains the target to the upside and pullbacks could find support at $1181. Despite a drop in US oil inventories, the energy market is still heading lower. There was spike in the price immediately after the announcement, but it is now trading below the pre-release level. While US light crude is under $30 and Brent is below $32 traders will be looking towards the 2016 lows of the respective markets.