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European equities are set gain on the open tracking gains in the US on Friday and overnight moves higher in Asia. Comments from Janet Yellen on Friday stating that any rate hikes this year would be gradual seems to have been taken as dovish and given support to the bulls. The cautious tone that she struck stating that there was no set path, completely dependant on the data, and the fact that she highlighted the risks of raising rates too quickly as greater than leaving them low for too long is also set to play in to the hands of the bulls this morning.
A dovish Federal Reserve Chair Janet Yellen said the US interest rates will only be raised gradually citing renewed concerns regarding a potential economic slowdown. Her statement managed to reverse the daily downtrend pushing equities higher towards the close. In particular the Dow Jones snapped a four days decline gaining 10 points to 17,712.
The stronger than expected economic data in the euro zone failed to provide additional support to the single currency lately. On top of that the euro could not hold its ground above 1.10 versus the dollar which many saw it as a chance for the greenback to regain momentum. Nonetheless, the latest US GDP report was rather on the disappointing side delivering fresh blows to the dollar. The EURUSD pair closed 7 pips up at 1.0889.
Concerns over potential disruptions in oil supplies due to Saudi Arabia conducting airstrikes in Yemen have receded sending crude prices sharply lower on Friday. In addition, Saudi army official Asseri said that his country has no intention to send ground troops into Yemen. Overnight, crude prices continued their plunge as Iran and the West hold talks over a nuclear deal which could accentuate a global supply glut.
Although the process will be gradual and data dependent, Yellen said she expects the central bank to raise rates this year which in turn also hit gold prices.
Marius is a dealer at Capital Spreads. His involvement with CFDs and spread betting started in 2008 after graduating from London Metropolitan University with an MSc in Finance. He provides analysis of the forex, stock index and commodity markets, with a particular focus on oil and gold.
Jonathan is also a dealer at Capital Spreads. Having started his career in the City trading interest-rate and bond derivatives in 2005, he entered the spread betting and CFD industry in 2007 by joining the dealing desk at City Credit Capital. After successfully managing multiple-asset risk books across the European, US and Asian time zones through the height of the financial crisis, he joined Capital Spreads in 2010.
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