USD Index Futures Hold Gains after Yellen Remarks

December 20, 2016 3:13AM CST

U.S. dollar index futures remain higher on Tuesday after remarks from Federal Open Market Committee Janet Yellen, in which she reiterated the continued improvement of the U.S. labor market. Yellen said job growth is at its strongest in 10 years, suggesting wage growth is gaining steam.

The March contract in U.S. dollar index futures was up .44 percent at 103.540 ahead of the open of U.S. commodities futures markets, and after overseas violence hit global markets.

The probability that the FOMC will increase its fed funds rate at its May, 2017 meeting is 34 percent compared to 36 percent last Friday, while possibility of a rate hike at the June meeting is 71 percent, compared to 74 percent predicted on Friday.

Some analysts have lowered expectations for rate hike frequencies in the coming year, and forecast the Fed to increase its fed funds rate one or two times in 2017, as opposed to three times predicted by FOMC officials.

There are no major reports on the economic calendar for the commodities futures markets on Tuesday. Wednesday brings Weekly Crude Oil Inventories and November Existing Home Sales. The third estimate of third-quarter GDP is due Thursday, along with Durable Goods Orders and Leading Indicators for November. Personal Income and Spending is also due, as well as the November Core PCE Price Index. Friday ends the week with the University of Michigan Consumer Sentiment final reading for December and November New Home Sales.

Within the last few days, commodities futures markets, particularly the equity sector, have reacted to global unrest. Prices fell after a gunman killed Russian's ambassador to Turkey, while in Berlin, a truck crashed into a crowded Christmas market, killing at least 12 people and injuring many others.

The Bank of Japan (BOJ) left policy unchanged on Tuesday at the conclusion of its two-day policy meeting, as widely expected. The central bank kept its negative 0.1 percent interest rate on banks for some excess reserves, left the 10-year Japanese government bond yield target at around zero, and kept annual rises in JGB holdings at 80 trillion yen ($676.9 billion).

Most commodities futures markets remain quiet ahead of the U.S. Christmas Day holiday this Sunday. Trading in futures and equity markets is expected to be light within the next two weeks, as many commodities futures markets participants take vacations ahead of Christmas and the New Year the following weekend.

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