Gold falls slightly as dollar, equities gain ahead of Yellen testimony

Phillip Butler
July 12, 2017

"A Fed rate hike can further dampen appetite for emerging markets as it points to further strengthening in the investment environment for developed markets", she said.

Asian stocks followed Wall Street and Europe higher on Tuesday as investors awaited cues from the U.S. corporate earnings season as well as Federal Reserve Chair Janet Yellen's semi-annual testimony before Congress on Wednesday and Thursday.

But the dollar grew top-heavy in late afternoon trading as investors retreated to the sidelines before U.S. Federal Reserve Chairwoman Janet Yellen's congressional testimony, scheduled for Wednesday and Thursday.

On Monday, financial markets around the world rallied and the US dollar touched a high of two-months versus the yen as the most recent jobs data from the USA gave investors more confidence in the strength of the USA economy.

"Looking ahead, we think improving corporate earnings are the key ingredient needed to sustain the equity bull market", said Bob Doll, senior portfolio manager and chief equity strategist at Nuveen Asset Management Llc.

The Bank of Canada, which meets Wednesday, is widely expected to raise interest rates after strong signals in speeches for such action over the past month. It ended 0.54 percent higher on Monday, taking the year-to-date gains to 12.7 percent.

The dollar increased by almost 0.4% against the yen which was a high of two months.


"Wednesday remains the most notable session of the week, with Fed Chair Janet Yellen testifying. and the Bank of Canada potentially raising interest rates for the first time in nearly seven years", said Craig Erlam, senior analyst at Oanda.

CURRENCIES: The dollar rose to 114.32 from 114.04 yen late Monday.

The Group of 20 meeting in Hamburg over the weekend did not have much impact on markets on Monday. That appeared to weigh on the company's shares, which slid 58 cents, or 0.5 percent, to $113.69.

As the USA economy is back on track for steady growth, Fed policymakers are preparing to unwind its crisis-era policies to avoid igniting inflation pressures or pumping up asset bubbles.

Oil crept up after sliding on Friday on a report showing USA crude production rose last week, just as OPEC exports hit a 2017 high, rekindling concerns about a supply glut.

The 10-year US Treasury yield was steady near a two-month high of 2.398 per cent hit on Friday.

Increased drilling activity in the United States and uncertainty over Libyan and Nigerian production cuts clouded the future supply outlook, leaving USA crude CLc1 down a third of a dollar at $44.13 a barrel and Brent LCOc1 at $46.57.

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