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Yellen Continues Dovish Tone, Dollar Drops, Gold Up

US Consumer Confidence Rose in March

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Consumer confidence in the US rose in the month of March as the consumer confidence index increased to 96.2, compared to February's 94, rising above the forecasts of 93.9. The data points to a rebound in consumption led by low unemployment, despite wage growth staying subdued in relation to the unemployment rate.

Janet Yellen Continues Her Dovish Remarks

The much anticipated speech by Fed Chair Janet Yellen yesterday saw the head of the Federal Reserve continuing her recent dovish tone. Yellen stated that her optimism on inflation strengthening might be wrong and that the FOMC was not on a preset course of tightening. She offered no clues whether the Fed will hike rates in April as suggested by other FOMC members over the past two weeks. Ms. Yellen said that US economic activity has seen little change since December and that the Federal Reserve will respond to the changes in outlook as needed. The US Dollar fell broadly across the board on her comments with EURUSD moving back close to the $1.130 resistance. Gold rose on Yellen’s statements with June COMEX gold up $15.50, or 1.3%, to settle at $1,237.50 an ounce.

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Oil Falls as Saudi Arabia & Kuwait Agree to Restart Oil Field

Oil prices came under pressure yesterday as news broke that Saudi Arabia and Kuwait agreed to restart pumping at the Khafji oil field, which could add as much as 300,000 barrels of oil per day to the existing supply. The news is likely to affect the upcoming meeting in April where oil production freeze talks are set to resume in Doha, but casts doubts under the current scenario. Oil prices are also under pressure ahead of the weekly crude oil inventory report due for release today by the US Department of Energy. Last week's report showed a strong build up in oil inventory in the US which saw WTI crude oil prices turn lower following weeks of a strong rally. Brent crude oil futures for May delivery closed yesterday at $39.32 a barrel while the WTI crude oil futures contract closed at $38.77 per barrel.

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Canadian Producer Prices Fell in February

Producer price index data from Canada reflected the steepest decline in prices in more than year with energy and petroleum products leading the declines. The raw materials price index was also weaker on lower energy products in the month of February. The producer price index fell 1.10% while the raw materials price index fell 2.60%, according to data released by Statistics Canada yesterday. The producer price index measures the price manufacturers receive when the finished goods leave the factory and do not consider the final or consumer price that is paid. Statistics Canada noted that the declines in the producer side were due to the 3.0% appreciation in the Canadian dollar during the month. The agency said that had the Canadian dollar’s exchange rate remained constant, producer price index would have contracted 0.40% instead.

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ADP March Payrolls Expected to Show 194K New Jobs

The ADP private payrolls data is due for release during the NY trading session today. Market forecasts are expecting a job print of 194k, lower from the 214k jobs created in February. Although the ADP private payrolls do not foretell the nonfarms payroll data, traders watch the ADP report for any surprise shifts between the actual and consensus data. While March is seasonally known to be a weak month for jobs mostly due to the harsh winters in the US, the warm weather this time around could see a surprise print to the upside. The ADP report comes ahead of Friday's nonfarm payrolls report where estimates are for 208k jobs being created in March.

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