Opening Bell: Dollar Falls, Global Equities Slide As Yellen Awaited

 | Feb 14, 2017 06:50AM ET

by Eli Wright

Though US markets closed higher yesterday, this morning the dollar fell and global stocks are mostly down as markets await Fed Chair Janet Yellen's two-day Congressional testimony which begins later this morning. The dollar's decline may also be a result of the resignation of US National Security Advisor Michael Flynn, after it became clear that he'd lied about discussions he'd had with Russia's ambassador to the US prior to President Trump's inauguration. Flynn held the position for less than a month.

Yellen is expected to answer questions about her confidence in the US and global economies; if and when there will be additional interest rate hikes; normalizing the Fed balance sheet; and the possible impact of deregulation and other fiscal policy proposals. Her tone and level of forthrightness could influence the direction markets will take in the coming days.

Separately, UK headline CPI came in lower than expected, at 1.8% vs 1.9% eyed, which is currently having a negative affect on the sterling. It's down 0.50% to 1.2462 at time of writing.

Overnight in Asia, the Nikkei fell 1.13%, to 19,238.98, driven in part by the melt-down in Toshiba's (T:6502) stock price after the company delayed Tuesday's earnings release because it was revealed that improprieties within its nuclear unit would result in a $6.3 billion write-down.

The Hang Seng closed flat at 23,710; and the Shanghai Composite edged 0.05% higher, to 3,218.38, buoyed by better-than-expected China CPI, which came in at 2.5% YoY versus the expected 2.4% and much stronger PPI, 6.9% vs the expected 6.3%.

In Europe, the FTSE is up 0.16% at 7,291. However the DAX has ticked 0.07% lower, to 11,768.50; and the Stoxx 50 has declined 0.12%, to 3,305.

On Wall Street yesterday, indices notched fresh all-time highs. The Dow closed 0.7% higher, at 20,412.16; while the S&P and NASDAQ each rose 0.52%, to 2,328.25 and 5,763.96, respectively. The Russell 2000 also closed at a record high, up 0.34% to 1,392.53.

In pre-market trading, the Dow, S&P, and NASDAQ are all lower by approximately 0.06%.

US Treasury yields are higher across the board: the 2-year yield is 1.206%; the 10-year yield is 2.438%; and the 30-year yield is 3.037%.

h3 Forex/h3

The Dollar Index is currently down 0.09% at 100.87, having slipped from yesterday’s intraday high of 100.96. To the upside, the greenback could rise to 101.5-102. However, downside support could be tested at 99.48.