Yellen’s seemingly dovish comments may set the stage for U.S. Dollar gains
An index of global stocks on Wednesday charged to its highest point since the start of the year, while the dollar weakened, as easing concerns about rising interest rates led investors into riskier assets.
Oil prices climbed, as commodities denominated in dollars became more attractive to users of other currencies. U.S. Treasury prices fell with benchmark yields rising from four-week lows amid selling in safe-haven bonds.
Federal Reserve Chair Janet Yellen said on Tuesday the U.S. central bank should proceed cautiously as it looks to raise interest rates, pushing back on a handful of her colleagues who have suggested another move may be just around the corner.
Yellen’s comments were echoed on Wednesday by Chicago Fed President Charles Evans, who said there was a high hurdle to raising rates in April, given low inflation.
“You have got the follow through from the Fed. They are taking one of the fears basically off the table at this point in terms of rising interest rates,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.
“The market has been basically kind of moving almost in tandem with what has been happening with the dollar. That trade got reinforced yesterday.”
The Dow Jones industrial average .DJI was up 101.98 points, or 0.58 percent, at 17,735.09, the S&P 500 .SPX gained 10.18 points, or 0.5 percent, at 2,065.19 and the Nasdaq Composite .IXIC added 20.28 points, or 0.42 percent, at 4,866.91.
The pan-European FTSEurofirst 300 index .FTEU3 advanced 1.3 percent.
MSCI’s index of world shares .MIWD00000PUS gained 1.4 percent, putting it into positive territory for 2016.
The dollar had hit its highest level in about two weeks against a basket of major currencies .DXY at the start of the week, boosted by a series of hawkish comments from Fed officials. But the greenback receded after Yellen’s comments, which pointed to global risks to the U.S economy.
