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Yellen remains the driver and the focus in markets

14 July, 2017, 19:09 | Author: Nadine Todd
  • GLOBAL MARKETS-Asian shares gain ahead of Yellen, shrug off Trump controversy

The dollar eased against the yen on Wednesday, after Federal Reserve Chair Janet Yellen said interest rates hikes would be gradual and that the USA central bank may not be able to raise rates by "all that much".

It's premature to reach the judgment that we're not on the path to 2 percent inflation over the next couple of years.

Federal Reserve Chair Janet Yellen warned Thursday that the Trump administration target of three percent growth will be "quite challenging" to meet.

WALL STREET'S DAY: The Standard & Poor's 500 index gained 0.7 percent to 2,443.25 and the Dow rose 0.6 percent to 21,532.14, a record high.

Asian markets closed mixed: Tokyo's Nikkei slipped 0.5 per cent, Hong Kong's Hang Seng rose 0.6 per cent and China's Shanghai Composite fell 0.2 per cent.

Yellen's remarks this week come as the Fed is picking up the pace of its interest rate hikes, which will eventually impact millions of Americans - from savers to home buyers to investors.

"She said rates won't have to rise much further to get to neutral, I thought that was key".

In her testimony on Capitol Hill on Wednesday, Yellen indicated that the Fed will take a cautious outlook to tightening policy amid an uncertain outlook.

Don't memorize any of what Yellen says, because she and other Fed governors are likely to say something completely contradictory tomorrow.

Facing sometimes tough questions from legislators, Yellen presented the Fed's required semi-annual report to Congress - possibly for the last time if President Donald Trump decides not to reappoint her for a second term at the helm of the USA central bank.

The dollar index was down 0.05% at 95.68 ahead of European trading. Business investment has turned up this year, she said, and stronger economic growth overseas has helped USA manufacturing and exports.

That disconnect has vexed policymakers, but Yellen has said the retreat in price pressures is likely temporary and signaled she is prepared to continue with rate hikes and a plan to start trimming the Fed's $US4.5 trillion ($F9t) balance sheet later this year. Pound/dollar was up 0.20% to last trade at 1.2961. The U.S. dollar rose to 0.9652 Swiss franc from 0.9631 Swiss franc, and it edged down to 1.2720 Canadian dollars from 1.2920 Canadian dollars.

In her testimony, Yellen cited "transitory factors" keeping United States inflation low, but also acknowledged "there could be more going on there".

New Zealand's two-year swap rate rose 1 basis point to 2.26 while the 10-year swaps rose 3 basis points to 3.35 percent.

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