Current Market Sentiment:

The main event for yesterdays NY session was the semi-annual testimony on the Monetary Policy Report from Fed Chair Janet Yellen. The immediate text release contained few surprises and the market did not drive the USD in any clear direction immediately. Yellen cited the risks of foreign economic developments but did not communicate anything particularly new. The Fed still expect inflation to rise to target and Yellen repeated that hikes will be gradual. During the Q&A she reminded the market that there was still a fair amount of data to be assessed between now and the March meeting, alluding to the Fed’s continued data dependence. EURUSD fell 100 pips during the session but then retraced the move.

There was no major data released during the Asian session. Asian equities are once again sliding with Hong Kong stocks off to their worst New Year start since 1994. The Hang Seng is currently down 4.11%, the Topix -3.02%, and the Nikkei -2.31%. As would be expected during times of risk aversion, the Yen has seen broad based strength.

This article originally appeared at Jarratt Davis.