Fed Chief Janet Yellen was the focal point of markets in early Wednesday trade in Asia. Yellen’s remarks on Tuesday led into testimony to Congress on Wednesday. Investors are awaiting her testimony to see if interest rate comments made on Tuesday will change.
The greenback remained steady overnight, as USD/JPY rose 0.02%, and AUD/USD rose 0.18% to trade at 0.7675.
Yellen stated on Tuesday that the central bank will discuss raising rates at upcoming meetings. The bank held off on raising rates in 2016, missing the 3 – 4 rate increase mark investors expected to start the year.
Yellen said waiting too long to increase rates would be unwise. Rate increases are reliant on the economy evolving with expectations. U.S. President Donald Trump’s fiscal policy changes may impact rate increases and economic outlook, according to Yellen.
Strong U.S. producer price data was released on Tuesday, marking the fastest growth rate in four years. Energy costs rose in January. A stronger dollar led to inflation remaining stable.
The Fed suggests a potential of 3 rate hikes in 2017. Investors expect a less than 20% chance that rates will be raised during the March meeting.
The Labor Department’s report shows that the producer price index rose 0.6% in January. Pressure on the dollar rose on Monday, as national security advisor Michael Flynn resigned from his position. Flynn was accused of meeting with Russian officials to discuss lifting sanctions before Donald Trump’s official inauguration.
NZD/USD hit a three week low on Tuesday, falling to 0.7132. The currency pairing is up 0.08% to 0.7175. Investors trading on the exclusive CFD platform Opteck remain cautious on Wednesday, as a string of data out of the US is expected.
Investors are looking ahead for data on manufacturing activity, retail sales and industrial production set to be released.
Oil prices edged lower on Wednesday, as investors suspect U.S. crude supply increases. The American Petroleum Institute released a report on Tuesday showing supplies rose by 9.9 million barrels for the period ended February 10.
OPEC’s production slowdown is an effort to help rebalance oversupply. U.S. supply growth is feared to negate OPEC’s effort.
Brent oil fell 0.14% in early morning trade on Wednesday. U.S. crude oil futures rebounded from a loss of 0.56% to a loss of 0.08% to trade at $53.16 a barrel.
Asian shares rose on Wednesday, with Tokyo leading the pack. The Nikkei 225 ended the day up 1.03% despite Toshiba shares tumbling 10.4% on the day.