The currency markets were mostly rangebound on Friday, with little new to move the market ahead of the new Fed Chair, Jerome Powell’s semi-annual testimony to Congress this week. The market is not expecting him to say anything new, with inflation expected to hang around 2% for the rest of the year, although several rate hikes are on the agenda. It appears that the Fed will hike three times this year and Fed fund futures are pricing in 83.1% for a 25bp hike in March. There is some speculation that there could be a fourth hike in 2018 and this was partly to blame for the recent loss of momentum in the 10 year yield last week, which saw a fall to 2.867% on Friday, and which also helped the rebound in stocks, which closed up by around 1.3%. The metals traded in a narrow range at the end of the week, while WTI settled higher, with a drop in Libyan production and upbeat comments from Saudi’s oil chief offsetting data showing that the number of US oil rigs increased for the fifth-straight week.
It is going to be an action-packed week’s ahead with a lot of data to get through although much of it will be of a secondary nature and the market is going to be fixated on what Jerome Powell has to say to Congress on Tues/Wed. Don’t expect any fireworks, with much of what he is going to say already scripted after the Fed released it Monetary Policy Report last week. It is still going to be pretty active on most days though, with Powell and the other highlights likely to be;
- Fed’s Bullard Speech – Mon
- German CPI, US Durable Goods Orders, Fed’s Powell – Testimony to Congress – Tues
- China NBS Mfg/Non-Mfg PMIs, US Preliminary Q4 GDP, Fed’s Powell – Testimony to Congress – Wed
- Australian CAPEX, EU/UK/US Mfg PMIs, US ISM Mfg/Prices Paid, US Personal Consumption/Expenditure – Thur
- German Retail Sales, EU PPI, US Rts/Michigan Consumer Sentiment Index – Fri.
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|ASX SPI: 5999|