New Fed Chair Yellen’s first testimony to Congress has had a significant effect on trading today. At first, it appeared traders didn’t know what to make of her indication that unless something really drastic happens, tapering is likely to continue at a consistent and measured pace through the rest of this year. Those perhaps wondering where the dove went appear to have been satisfied by her comments that interest rates are expected to remain accommodative well past the end of QE3 and that she plans to continue to dual employment and inflation mandates. As the day has progressed, the street appears to have increasingly taken the comments as supportive for the economy, sending USD lower and sparking rallies in stocks and commodities. Indications that the US house is preparing to vote on a clean bill to increase the debt ceiling enough to last until March of 2015 also looks to remove a potential political risk headwind. Most significantly, gold broke out of an ascending triangle base today on a combination of the Yellen reaction and ongoing concerns about selected emerging markets after Kazakhstan devalued its currency. Resource currencies have taken advantage of the USD retreat and improving attitudes toward the global economy and resource demand. The gold-sensitive ZAR has gained 1.5% today with AUD up 1% while NZD and CAD also make inroads on the greenback. Commodity markets have been active today, particularly natural as which has rebounded to claw back some of its recent losses as it remains active through the peak of home heating season. Gasoline has posted a 1% plus gain as some traders start to look toward driving season. Momentum has remained positive through the afternoon and heading into today’s Asia Pacific trading. China-sensitive markets such as copper, Chinese and Australian indices plus AUD and NZD could be active today with China’s trade balance due, one of the few indicators for the country coming this month due to the Lunar New Year holiday. Tomorrow the focus turns to Europe and what Bank of England Governor Carney plans to due about his 7% unemployment rate threshold for action after it has been neared far sooner than expected. Corporate News Fossil $2.68 vs street $2.4, guides EPS to $1.10-$1.18 short of street $1.29 Western Union $0.31 vs street $0.33 Intuit Profit warning! Cuts EPS guidance to $0.01-$0.02 from $0.25-$0.27, lowers sales guidance to $775-780M from $890-910M Economic News Significant announcements released overnight include: Kazakhstan devalued its currency by 19% overnight to 185/USD from 155/USD. Highlights of Dr. Yellen’s prepared remarks to Congress include: She has been part of the decision making process so expect continuity in the Fed’s approach to monetary policy As long as there is ongoing improvement in labour markets and inflation toward targets further measured QE reductions likely, but no preset course leaves door open to change if needed. Accommodative policy will remain after QE asset purchases end. Remains committed to dual employment and inflation mandate. Upcoming significant announcements include: 11:30 am AEDT Australia consumer confidence street 103.3 3:00 pm AEDT China trade balance street $23.6B vs previous $25.6B 10:00 am GMT Eurozone industrial production street 1.8% 10:30 am GMT Bank of England inflation report and Governor Carney speech 3:30pm GMT ECB President Draghi speech

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