Yellen countdown heightens market sensitivity

Global stocks inched higher during trading on Thursday as the positive combination of renewed US rate hike expectations and resurgence in oil prices elevated global sentiment. European markets charged ahead causing most major equities to conclude positive following the recent polls displaying a lead in the “Bremain” camp.

With uncertainty diminishing ahead of the E.U referendum vote in June, the renewed risk appetite could propel global stocks higher. Although Wall Street displayed exhaustion during trading on Thursday as investor anxiety mounted ahead of Janet Yellen’s speech, prices could be poised for further inclines if hawks are let loose. Asian markets have started Friday on a positive footing amid speculations of further stimulus in China and this optimism could ripple into Europe during trading today.

Focus on Janet Yellen

Investors may direct their focus towards Janet Yellen today with most seeking additional clarity on when, or if, the Federal Reserve may raise US rates again in Q2. Sentiment towards the US economy has improved this month with an impressive array of domestic data bolstering speculation that US rates could be increased in June or July. With retail sales, inflation and new homes sales exceeding forecasts, the prerequisites for another US rate hike in Q2 could be fulfilled if US GDP and next week’s NFP exceed expectations. Yellen’s comments could act as a catalyst today for Dollar bulls to rampage if she chants the same hawkish tune as the other board governors. Although the CME group Fedwatch tool displays a 26% probability that a June hike could occur, concerns over slowing global growth and persistent China woes may also disrupt the Fed’s efforts to take action.

G7 warn of Brexit

The “Bremain” camp was offered additional inspiration during trading this week following the declaration at the G7 meeting warning that a Brexit could pose a serious threat to Global growth. With major financial institutions and even the G7 highlighting the immeasurable damage a Brexit could cause to the world, expectations have mounted that the UK could actually remain in the E.U after the vote on the 23^rd of June. This Brexit saga is slowing coming to an end and the intensifying debates seem to be dominated by the “Bremain” camp that has been supported by many financial heavy weights. Although sentiment was bearish towards the Sterling following the mixture of tepid domestic data and fading expectations over a UK rate hike, the optimism that “Bremain” could win may have created a foundation for bullish investors to pounce.

WTI Crude shocks market

WTI Crude prices surged during trading on Thursday with prices smashing above $50 as an amalgamation of short-term declining production from oil export nations and a weakening Dollar encouraged bullish investors to install a round of buying. This appreciation is remarkable and could be classified as a technical bounce simply because the fundamental oversupply woes continue to linger in the background. With anxiety mounting ahead of the OPEC meeting in June, bulls have exploited the sharp periods of volatility with speculative boosts in oil prices causing the commodity to trade to mind blowing levels. Although prices have traded to 7 month highs, investors should keep diligent as confidence remains very low that an oil production freeze deal will be struck at the meeting.

Gold under pressure

Gold stumbled towards nine week lows during trading this week following the painful mixture of Dollar resurgence and growing hopes of a US rate hike which severely dulled the metals allure. Price have sunk towards $1210 and may dip lower if Yellen releases the hawks this evening. For an extended period Gold has been shackled by US rate hike expectations and with speculations heightened that the Fed could take action, bears could install a heavy round of selling momentum that drags prices below the strong $1210 support. From a technical standpoint, prices are trading below the daily 20 SMA while the MACD has also crossed to the downside. Thursday bearish candle suggests that this bearish momentum could offer a foundation for sellers to send prices towards $1210 and potentially lower.

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