• The U.S. economy is healthy enough for the Fed to raise rates and begin winding down its massive bond portfolio, though low inflation and a low neutral rate may leave the central bank with diminished leeway, Fed Chair Janet Yellen said on Wednesday.
In what may be one of her last appearances before Congress, Yellen depicted an economy that, while growing slowly, continued to add jobs, benefited from steady household consumption and a recent jump in business investment, and was now being supported by stronger economic conditions abroad.
The Fed "continues to expect that the evolution of the economy will warrant gradual increases in the federal funds rate over time," Yellen said in her prepared testimony. Reductions in the Fed's portfolio of more than $4 trillion in securities are likely to begin "this year," she said.
• Kansas City Federal Reserve Bank President Esther George, a longtime critic of the U.S. central bank's bond buying program, said Wednesday she wants to get started on trimming the Fed's $4.5 trillion balance sheet in the "near future."
• The dollar was capped against a basket of currencies early on Thursday after Federal Reserve Chair Janet Yellen did not sound as hawkish as many had anticipated, while the Canadian dollar stood near a 13-month high after its country's central bank hiked interest rates for the first time since 2010.
The dollar index against a basket of major currencies was flat at 95.758 .DXY after retreating to as low as 95.511 the previous day, its weakest in 12 days.
The greenback was 0.2 percent higher at 113.440 yen JPY= after losing about 0.7 percent overnight, when it was pulled back from a four-month high near 114.495 scaled earlier in the week on expectations of U.S.-Japan monetary policy divergence.
• The Canadian dollar, also boosted by a rise in crude oil prices, stood at C$1.2750 per dollar CAD=D4 after rallying more than 1 percent to C$1.2681 overnight, its strongest since June 2016.
• The euro was little changed at $1.1419 EUR=, having reached a 14-month high of $1.1489 on Wednesday. The common currency has edged up steadily this month on speculation that the ECB would begin reversing its very easy monetary policy sooner rather than later.
• Donald Trump Jr.'s meeting with a woman he was told was a Russian government lawyer who had incriminating information about Democratic candidate Hillary Clinton that could help his father's presidential campaign could lead investigators to probe whether he violated U.S. election law, experts said.
• U.S. President Donald Trump said on Wednesday he did not fault his son Donald Trump Jr. for meeting with a Russian lawyer during the 2016 presidential election campaign and that he was unaware of the meeting until a few days ago.
• The United States notified South Korea on Wednesday it plans to start negotiating amendments to a five-year-old free trade agreement with Seoul and called a meeting to kick off the talks for next month.
• The Bank of England should consider unwinding its 435 billion pound quantitative easing program earlier than planned, BoE policymaker Ian McCafferty told the Times in an interview.
• Oil futures rose, maintaining some gains from earlier in the day, as a report showing hefty drawdowns in U.S. crude inventories was offset by data pointing to lackluster gasoline demand.
Brent crude futures LCOc1 rose 22 cents, or 0.5 percent, to settle at $47.74 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 gained 45 cents, or 1 percent, to settle at $45.49.
• U.S. crude inventories fell 7.6 million barrels last week, its biggest weekly plunge in 10 months, the U.S. Energy Information Administration (EIA) said.
Reference: Reuters
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