USD Gains Amid Fed Speak

The U.S. dollar was mostly firmer against its major counterparts with the exception of the NZD as equities traded mixed and Treasury yields declined. The GBP underperformed, extending losses after the overnight release of its trade balance figures which showed a wider than expected trade deficit. There was no economic data of note in North America, however the Fed released its Beige Book which noted that growth was ‘modest to moderate’ across the U.S. The survey showed that hiring has been limited, residential real estate remained sluggish and price pressures are ‘quite limited’. Bright spots included the indication of a pick up in consumer spending and continued expansion in manufacturing.

U.S. equities traded to the downside for the majority of the session and managed to climb from deep in negative territory to finish the day relatively flat. The S&P 500 closed out the session marginally higher by about +0.03% while the Dow Jones Industrial Average slumped by about -0.11%. UST yields were lower across the board as the Treasury sold $21B in 10-yr notes at a record low 1.90%.
There was plenty of Fed speak amid a lack of fresh economic data reports. Chicago Fed President Charles Evans said that despite the firmer tone of recent economic releases 'the data are not strong enough, or uniform enough, to assert that momentum for growth is building'. Evans urged that the Fed take on 'substantial' monetary stimulus. Atlanta Fed President Dennis Lockhart avoided taking a 'rigid position' on additional easing noting that he anticipates a 'moderate pace of improvement'. Philadelphia Fed President Plosser took a more hawkish stance and said that he has been encouraged by recent data and questioned whether more stimulus is needed.

Due out of the Asia/Pacific session are Japan’s November current account figures, December Eco Watchers survey and machine tool orders. New Zealand sees the ANZ commodity price index for December.