Opening Bell: Stocks Climb Ahead Of Key Fed Speech; USD Eyes 17-Month High

The dollar initially edged higher but later wavered around neutral levels. Technically, the greenback reached 0.6% below the November 12 close and 0.20 percent from the November 12 high. Any additional gains will extend the medium-term uptrend and take the USD to the highest levels since June 2017.

The pound was mildly positive amid new developments in the battle between UK Prime Minister Theresa May and Parliament, as May appeared to abandon her attempts to get her draft Bexit proposal voted without amendments. European bonds and the euro meandered.

Bitcoin climbed above $4,000 after plunging earlier in the week.

Brent crude also rebounded to about $61 a barrel, though it later slipped into negative territory. Overall, the recent shifts in the oil market seem to have swayed the direction of the broader commodities spectrum this year.

Later today, Powell's speech will be scrutinized for any clue, however subtle, on whether the pace of the Fed's interest rate tightening will slow down to any extent. Recently, investors have reacted strongly to the continued removal of the central bank's unprecedented accommodation, which was the main tailwind for the longest bull market on record. Clarida said risks to the US economy are “less skewed to the downside,” while St. Louis Fed President James Bullard was more cautious, telling Reuters that officials must monitor possible “cracks” in the American recovery and that growth is going to slow in 2019 and 2020.

We have repeatedly argued that interest rates are the main driver of long-lasting market moves, while the US-China trade story will be less impactful in the longer term. Nevertheless, trader focus will also be turning to the long-awaited meeting between Trump and Xi Jinping in Buenos Aires this week, with the outcome remaining highly uncertain after Trump's recent mixed messages.

• Presidents Donald Trump and Xi Jinping plan to meet at the G-20 summit in Argentina that kicks off on Friday.
• Federal Reserve Chairman Jerome Powell addresses the New York Economic Club on Wednesday.
• Thursday sees the release of the minutes from the Federal Open Market Committee’s November meeting.

Stocks

• Futures on the S&P 500 climbed 0.1 percent, to the highest level in more than a week.
• The Stoxx Europe 600 gained 0.5 percent to the highest level in two weeks.
• The MSCI All-Country World Index edged 0.2 percent higher to the highest level in more than a week.
• The MSCI Emerging Market Index increased 0.8 percent to the highest level in more than a week on the biggest climb in almost two weeks.

Currencies

• The Dollar Index climbed more than 0.1 percent to the highest in more than two weeks.
• The Japanese yen dropped 0.1 percent to 113.86 per dollar, the weakest level in almost three weeks.
• The British pound gained less than 0.05 percent to $1.2749.
• The MSCI Emerging Markets Currency Index gained less than 0.05 percent.

Bonds

• The yield on 10-year Treasuries increased less than one basis point to 3.06 percent.
• Germany’s 10-year yield slipped one basis point to 0.34 percent.
• Britain’s 10-year yield declined one basis point to 1.382 percent.
• The spread of Italy’s 10-year bonds over Germany’s advanced two basis points to 2.956 percentage points.

Commodities

• The Bloomberg Commodity Index ticked 0.3 percent higher, the first advance in a week.
• LME copper advanced 0.4 percent to $6,146.50 per metric ton, the biggest gain in a week.
• Gold slid 0.2 percent to $1,213.19 an ounce, the weakest level in two weeks.