Yellen testimony: the next market moving event

10 February,, Lagos – The Australian economy may finally be regaining its steam back! The Westpac Consumer Sentiment released earlier today showed an ample number of optimists over pessimists. The index surveys about 1,200 consumers, asking them to rate the relative level of past and future economic conditions, employment, and climate for major purchases. The results came at 4.5%, a sharp recovery from -3.5% recorded last month, as respondents showed relief that the Australian markets did not follow through on the steep fall with which the year began, amongst other things.

The Australian market has been quite mixed lately. It fell steeply yesterday, only to regain most of its losses in the New York trading session.

For the today, the high point will be Federal Reserve’s Chairman Yellen testimony on the Semiannual Monetary Policy Report at 3:00 P.M GMT, before the House Financial Services Committee in Washington DC. We also have key data from the UK.

UK Manufacturing Production m/m

UK’s Manufacturing Production m/m is due for release on Wednesday. The figure is now expected to show zero percent change in the total inflation-adjusted value of output produced by manufacturers. This is a potential development from -0.4% recorded last month. The sterling is presently mixed against its major pairs and would be looking for a catalyst to send it into a clearer trend.

What spooks global markets?

Asian stock markets experienced another beating as Tokyo again led sharp losses on growing investor worries about the world economy, and the possibility of a global recession. The question remains what’s spooking global markets? A wide range of factors can be responsible. China’s woes remain an issue of serious concern as investors seem to abandon ship out of fear that the country may sink completely. This has led to a currency crisis for the nation, pushing its foreign reserves to $3.23 trillion, where authorities are spending about $100 billion a month in an effort to prop up the yuan against a capital exodus and speculation.

We also have the ongoing currency wars sending jitters all across markets. While China started the 2016 market turmoil, it is arguably the Bank of Japan (BOJ) that pushed the ball along into February. By adopting negative interest rates the BOJ may have spooked other central banks who are also struggling with their currency conditions. China is trying to manage the decline in its yuan, the European Central Bank has made relentless efforts in recent years to lower its currency and the US Fed is worried about the rising value of the dollar.

This could be the next level of macro economic risk. However, it will be interesting to hear the Yellen testimony today, when she testifies on the Semiannual Monetary Policy Report before the House Financial Services Committee.

Don’t forget to check in with us later today to find out more about what happened during the Yellen testimony, and what its effects on the Markets may be.

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