Talking Points
- Most Asian stocks made gains Tuesday
- There wasn’t’ much Asian economic news to support them, however
- The US Dollar gained, but those gains slowed as ‘risk free’ yields did the same
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European stocks were broadly higher Tuesday in a session short of economic news, as investors looked ahead to Wednesday when Federal Reserve Chair Janet Yellen will deliver the first of two days' Congressional testimony on monetary policy and the economy.
At present the markets expect one more interest-rate increase in the US this year, and perhaps some reduction of the Fed’s huge balance sheet. San Francisco Fed Reserve President John C Williams spoke on this subject in Sydney. He said that it would be appropriate for the central bank to unwind some that sheet this year, and that forecasts of another rate hike this year seem reasonable to him, but added little to markets’ overall policy knowledge.
In the foreign exchange space the Australian Dollar was supported by solid business confidence numbers. Home-loan data released at the same time was weaker than expected, but this did no lasting damage to the Aussie. The US Dollar meanwhile was broadly higher, if not by much, as sovereign yields’ rise slowed through the Asian session as investors looked to Ms. Yellen.
By the close the Nikkei 225 had gained 0.6%, with most other Asian indexes higher- probably on that US Dollar strength, again with the exception of Shanghai. Crude oil prices added about 20 cents/barrel, reportedly on hopes for increased US demand. However longer-term oversupply worries continue to glower over this market. Gold prices were lower as the US Dollar stayed firm and yields gained.
The rest of the global session offers in little in the way of top-tier economic events, with only Canadian housing starts likely to draw any sort of crowd. Investors will hear from some central bankers, however. The Federal Reserve’s Lael Brainard will talk in New York and the Bank of England’s Chief Economist Andy Haldane speaks in London. His colleague Ben Broadbent, BoE Deputy Governor for Monetary Policy, will speak in Scotland.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
