Markets await testimony from Yellen; dollar likely in focus

European shares were uneven in early trading.

The Australian Dollar has continued tumbling against the US Dollar as the “Greenback” was strengthened by increasing market bets of a rise in interest rates in December, with investors now predicting the chances of the Fed hiking rates to be over 90%.

European stocks slipped lower Friday as the surging USA dollar lifted bond yields around the world and hammered domestic currencies in the wake of hawkish comments from Fed Chair Janet Yellen and a dovish speech from ECB President Mario Draghi. “However, the hesitancy seen in United States stock markets is a clear nod to the fact that with such dollar appreciation comes an environment which is progressively more hard for U.S. exporters”.

“It’s the same theme, which is continued backing up of U.S. yields as the market reprices the prospects of Federal Reserve rate hikes”, said Sue Trinh, head of Asia FX strategy at Royal Bank of Canada in Hong Kong. Trump’s policies would be “very, very inflationary, the interest rate is most likely to rise, and the dollar is most likely to rise too”, he said.

Investors hope banks will benefit from higher interest rates, faster economic growth and lighter regulation under President-elect Trump. Tesoro shares rose $3.23, or 3.8 percent, to $88.97. Chevron gained $1.34, or 1.2 percent, to $109.69 and Occidental Petroleum added 93 cents, or 1.3 percent, to $69.86.

Drug company stocks are coming off their biggest weekly gain in two years.

DOLLAR BUOYANT: Predictions of a rate hike have been one of the main reasons why the dollar has been buoyant over recent weeks.

Silver slipped 0.3 percent to $16.61 per ounce.

GOING HUNGRY: Jam and jellies maker J.M. Smucker disclosed weak sales and its stock shed $4.53, or 3.5 percent, to $125.42.

Bullion for immediate delivery dropped as much as 1.1 percent to $1,202.96, the lowest since May 30. The euro fell to $1.0599 from $1.0626.

Abercrombie & Fitch (ANF.N) skidded 11.1 percent to $15.05 after the teen apparel retailer posted a bigger-than-expected drop in quarterly sales.

Salesforce.com rose 6.2 percent to $79.87, a day after it forecast current-quarter revenue above analysts’ estimates. The Labor Department said the CPI increased 0.4 percent last month after rising 0.3 percent in September. Benchmark U.S. crude futures slid 45 cents to $44.97 a barrel in electronic trading on the New York Mercantile Exchange.

The data pushed up yields on US Treasury notes, underpinning the dollar. The Nasdaq composite touched a record high early on, but turned lower and gave up 12.46 points, or 0.2 percent, to 5,321.51. Copper rose 2 cents to $2.49 a pound.

OVERSEAS: France’s CAC 40 fell 0.5 percent and the FTSE 100 in Britain dipped 0.3 percent. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.61 percent to 920.63 tonnes on Thursday. South Korea’s Kospi shed 0.3 percent to 1,974.58 while Hong Kong’s Hang Seng rose 0.3 percent to 22,316.50.