Dollar falls on profit taking, though Fed rate hike concerns support

Investing.com - Investing.com - The dollar moved lower against most major currencies due to profit taking on Friday, though ongoing expectations for the Federal Reserve to continue signaling when interest rates may rise trimmed earlier losses.

In U.S. trading on Friday, EUR/USD was up 0.14% at 1.3797.

The U.S. currency shot up this week after Federal Reserve Chair Janet Yellen suggested at a Wednesday press conference that interest rates could rise six months after the Fed's bond-buying program ends, which is widely seen taking place this fall.

Fed asset purchases, currently set at $55 billion a month, aim to stimulate the economy by suppressing interest rates, weakening the dollar as long as they remain in effect, and Yellen's comments left many expecting benchmark interest rates to begin rising around the first half of 2015.

Profit-taking sent the dollar falling on Friday.

However, giving the greenback some support were comments made by Federal Reserve Bank of St. Louis President James Bullard, who told reporters earlier that Yellen's six-month space between the end of bond purchases and tighter monetary policy matched private-sector expectations.

"On the 'considerable period' being six months, the surveys that I had seen from the private sector had that kind of number penciled in,'' St Louis Federal Reserve President James Bullard said during a lunch with journalists, according to Reuters.

"That wasn't very different from what we had heard from financial markets. So, I just think she's just repeating that.''

Elsewhere on Friday, Fitch Ratings affirmed U.S. long-term foreign and local currency credit ratings at AAA with a stable outlook, taking the country off negative ratings watch.

Meanwhile in Europe, data revealed that consumer confidence within the euro zone fell less than expected last month.

The European Commission reported earlier that its euro zone consumer confidence index fell to -9.3 in March from -12.7 in the preceding month.

Analysts had expected the index to fall -12.4 last month.

Separately, data revealed that the euro zone's current account surplus expanded unexpectedly in January.

The European Central Bank reported earlier that the euro zone current surplus account widened to €25.3 billion in January from €20.0 billion in December.

Analysts were expecting the current account surplus to narrow to €18.4B in January.

The dollar was down against the yen, with USD/JPY down 0.26% at 102.13, and down against the Swiss franc, with USD/CHF down 0.20% at 0.8820.

The greenback was up against the pound, with GBP/USD down 0.05% at 1.6497.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.30% at 1.1208, AUD/USD down 0.31% at 1.1207 and NZD/USD up 0.05% at 0.8538.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.14% at 80.23.

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Gold gains as markets look past Yellen rate hike comments

Investing.com - Investing.com - Gold prices gained as the dollar edged lower on Friday after markets priced in Federal Reserve Chair Janet Yellen's Wednesday comments suggesting interest rate hikes may come around the first half of next year.

Gold and the dollar tend to trade inversely with one another.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at $1,335.60 a troy ounce during U.S. trading, up 0.38%, up from a session low of $1,327.80 and off a high of $1,343.00.

The April contract settled down 0.81% at $1,330.50 on Thursday.

Futures were likely to find support at $1,321.10 a troy ounce, Thursday's low, and resistance at $1,393.80, the high from Sept. 8.

The dollar posted strong gains this week after Federal Reserve Chair Janet Yellen suggested at a Wednesday press conference that interest rates could rise six months after the Fed's bond-buying program ends, which is widely seen taking place this fall.

Fed asset purchases, currently set at $55 billion a month, aim to stimulate the economy by suppressing interest rates, weakening the dollar as long as they remain in effect, and Yellen's comments left many expecting benchmark interest rates to begin rising around the first half of 2015.

Profit-taking sent the dollar falling on Friday, while bottom fishing sent gold prices rising, after investors priced in the likelihood that years of ultra-loose monetary policy may be coming to an end in 2015 and looked ahead for fresh market steering currents.

Elsewhere on Friday, Fitch Ratings affirmed U.S. long-term foreign and local currency credit ratings at AAA with a stable outlook, taking the country off negative ratings watch.

Meanwhile, silver for May delivery was down 0.70% at US$20.288 a troy ounce, while copper futures for May delivery were up 0.67% at US$2.948 a pound.

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Gold drops on Yellen rate hike comments

Investing.com - Investing.com - Gold prices dropped as the dollar rose on Thursday as investors bet that rate hikes will take place around the first half of 2015 based on comments Federal Reserve Chair Janet Yellen made on Wednesday.

Gold and the dollar tend to trade inversely with one another.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at $1,331.00 a troy ounce during U.S. trading, down 0.77%, up from a session low of $1,321.10 and off a high of $1,335.00.

The April contract settled down 1.30% at $1,341.30 on Wednesday.

Futures were likely to find support at $1,320.10 a troy ounce, the low from Feb. 28, and resistance at $1,393.80, the high from Sept. 8.

The dollar shot up for a second day after Yellen suggested at a Wednesday press conference that interest rates could rise six months after the Fed's bond-buying program ends.

The Fed is currently buying $55 billion in Treasury and mortgage debt a month, and expectations for the monetary authority to taper that figure gradually and close the program by fall followed by rate hikes in 2015 strengthened the dollar against gold.

Fed asset purchases aim to stimulate the economy by suppressing interest rates, weakening the dollar as long as they remain in effect, thus making gold an attractive hedge.

Elsewhere, data on Thursday showed that fewer individuals sought first-time jobless benefits in U.S. last week than markets were expecting, which added to the dollar's gains.

The Department of Labor reported that the number of people filing for initial jobless benefits in the week ending March 15 rose by 5,000 to 320,000 from the previous week's total of 315,000. Analysts had expected jobless claims to rise by 10,000 last week.

A separate report showed that manufacturing activity in the Philadelphia-region expanded at a faster rate than expected in March,

In a report, the Federal Reserve Bank of Philadelphia said that its manufacturing index improved to a reading of 9.0 this month from February's -6.3 reading. Analysts had expected the index to rise to 3.8 in March.

On the index, a reading above 0.0 indicates improving conditions, below indicates worsening conditions.

The survey's broadest indicators for general activity, new orders, and shipments increased and recorded positive readings this month, suggesting a return to growth following weather-related weakness in February.

Company employment levels were near steady, but responses reflected optimism about adding to payrolls over the next six months.

The survey's indicators of future activity reflected optimism about continued growth over the next six months.

Soft housing data failed to seriously dent the greenback's advance and offset gold's decline, as markets dismissed the disappointing numbers as the product of rough winter weather.

The National Association of Realtors reported earlier that existing home sales fell 0.4% to a seasonally adjusted 4.60 million units in February from 4.62 million in January.

February's pace of sales was the lowest since July 2012.

Meanwhile, silver for May delivery was down 2.16% at US$20.377 a troy ounce, while copper futures for May delivery were down 1.70% at US$2.936 a pound.

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Dollar extends gains on Yellen comments, U.S. data

Investing.com - Investing.com - The dollar carried Wednesday's gains against most major currencies into Thursday after Federal Reserve Chair Janet Yellen suggested earlier that rate hikes were possible around the first half of 2015.

In U.S. trading on Thursday, EUR/USD was down 0.40% at 1.3777.

The dollar shot up for a second day after Yellen suggested at a Wednesday press conference that interest rates could rise six months after the Fed's bond-buying program ends.

The Fed is currently buying $55 billion in Treasury and mortgage debt a month, and expectations for the monetary authority to taper that figure gradually and close the program by fall followed by rate hikes in 2015 strengthened the dollar against most other currencies.

Fed asset purchases aim to stimulate the economy by suppressing interest rates, weakening the dollar as long as they remain in effect.

Elsewhere, data on Thursday showed that fewer individuals sought first-time jobless benefits in U.S. last week than markets were expecting, which added to the dollar's gains.

The Department of Labor reported that the number of people filing for initial jobless benefits in the week ending March 15 rose by 5,000 to 320,000 from the previous week's total of 315,000. Analysts had expected jobless claims to rise by 10,000 last week.

A separate report showed that manufacturing activity in the Philadelphia-region expanded at a faster rate than expected in March,

In a report, the Federal Reserve Bank of Philadelphia said that its manufacturing index improved to a reading of 9.0 this month from February's -6.3 reading. Analysts had expected the index to rise to 3.8 in March.

On the index, a reading above 0.0 indicates improving conditions, below indicates worsening conditions.

The survey's broadest indicators for general activity, new orders, and shipments increased and recorded positive readings this month, suggesting a return to growth following weather-related weakness in February.

Company employment levels were near steady, but responses reflected optimism about adding to payrolls over the next six months.

The survey's indicators of future activity reflected optimism about continued growth over the next six months.

Soft housing data failed to seriously dent the greenback's advance, as markets dismissed the disappointing numbers as the product of rough winter weather.

The National Association of Realtors reported earlier that existing home sales fell 0.4% to a seasonally adjusted 4.60 million units in February from 4.62 million in January.

February's pace of sales was the lowest since July 2012.

The dollar was up against the yen, with USD/JPY up 0.08% at 102.41, and up against the Swiss franc, with USD/CHF up 0.36% at 0.8842.

The greenback was up against the pound, with GBP/USD down 0.24% at 1.6498.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.02% at 1.1241, AUD/USD down 0.02% at 0.9038 and NZD/USD down 0.36% at 0.8530.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.31% at 80.37.

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Fed leaves rates unchanged, trims bond-buying program by USD10 billion

Investing.com - The Federal Reserve on Wednesday left its benchmark interest rate, the fed funds target rate, unchanged at 0.00%-0.25% and trimmed $10 billion from its $65 billion monthly asset-purchasing program in place to spur recovery.

The Fed is now purchasing $55 billion in Treasury holdings and mortgage debt a month to help make broader financial conditions more accommodative to strengthen recovery.

The Fed's statement omitted previous language calling for considerations for hike rates if the unemployment rate approaches a 6.5% threshold, a policy tool known as forward guidance.

Even though the economy is improving, a highly accommodative monetary policy stance remains appropriate, the U.S. central bank said.

Fed officials said labor-market indicators were mixed but improving, though the unemployment rate remains elevated.

Still, recovery remains healthy enough to throttle back on stimulus tool such as monthly asset purchases but weak enough to do away from rate-hike thresholds.

"The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run," the Fed said in a statement at the end of its March policy meeting, the first under Chair Janet Yellen.

"With the unemployment rate nearing 6-1/2 percent, the Committee has updated its forward guidance. The change in the Committee's guidance does not indicate any change in the Committee's policy intentions as set forth in its recent statements."

The U.S. unemployment rate hit 6.7% in February.

Overall, the economy continues to improve and warrants less Fed stimulus, though inflation rates are still running below the U.S. central bank's 2% target.

"Household spending and business fixed investment continued to advance, while the recovery in the housing sector remained slow," the statement read.

"Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable."

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Dollar firms on Fed tapering move, Yellen comments

Investing.com - Investing.com - The dollar shot up against most major currencies on Wednesday after the Federal Reserve cut its monthly bond-buying program to $55 billion from $65 billion, while comments from Janet Yellen suggesting a possible timetable as to when rates may rise spooked markets and sent investors chasing safe-haven greenback positions.

Fed bond purchases spur recovery by suppressing interest rates, weakening the dollar in the process.

In U.S. trading on Wednesday, EUR/USD was down 0.75% at 1.3829.

The Fed earlier said it was leaving interest rates unchanged and reduced the amount of bonds it buys in the open market each month to $55 billion from $65 billion, both moves in line with expectations.

The news sent the greenback rising, as the Fed's asset-purchasing program, which kicked off in 2012 at $85 billion a month, has suppressed long-term interest rates for over a year, sending investors to assets like stocks with the hope investing and hiring ensues.

Elsewhere, the Fed omitted previous language calling for rate hikes if the unemployment rate approaches a 6.5% threshold, a policy tool known as forward guidance.

Even though the economy is improving, a highly accommodative monetary policy stance remains appropriate, the U.S. central bank said.

The dollar shot up, however, after Fed Chair Janet Yellen suggested at a press conference that interest rates could rise six months after the bond-buying program ends, which sparked a selloff in equities markets and fueled demand for the dollar.

The dollar was down against the yen, with USD/JPY up 1.08% at 102.53, and up against the Swiss franc, with USD/CHF up 0.86% at 0.8806.

The greenback was up against the pound, with GBP/USD down 0.30% at 1.6542.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.99% at 1.1246, AUD/USD down 0.92% at 0.9040 and NZD/USD down 0.73% at 0.8557.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.76% at 80.12.

On Thursday, the U.S. is to publish the weekly report on initial jobless claims, as well as data on existing home sales and manufacturing activity in the Philadelphia region.

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U.S. stocks gain on Putin assurances; Dow rises 0.55%

Investing.com - Investing.com - U.S. stocks finished Tuesday higher after Russia said it had no plans to annex Ukraine, while data out of the housing sector drew applause as well.

At the close of U.S. trading, the Dow Jones Industrial Average rose 0.55%, the S&P 500 index rose 0.72%, while the Nasdaq Composite index rose 1.25%.

Markets rallied after Russian President Vladimir Putin said that Moscow isn't seeking "a partition of Ukraine."

The speech came one day after President Putin recognized the results of Sunday's referendum in Crimea, which saw a majority of voters opting to split from Ukraine.

The European Union and the U.S. have declared the vote illegal and imposed sanctions.

Relief buying sent stocks rising as did data suggesting the U.S. economy continues to recover despite lingering headwinds.

The Labor Department on Tuesday reported that the U.S. consumer price index slowed to 1.1% in February from 1.6% in January. Analysts had expected the annual inflation rate to decline to 1.2%.

Month-on-month, U.S. consumer prices rose 0.1% in February, in line with forecasts.

Core inflation rates, which are stripped of volatile food and energy prices, rose 1.6% on year and 0.1% month-on-month, both figures in line with market forecasts.

The Federal Reserve plays close attention to core inflation rates when deciding on monetary policy.

Separately, the Commerce Department reported that the number of building permits issued in the U.S. rose to a four-month high in February, rebounding after a sharp drop in January.

The number of building permits issued last month jumped 7.7% to 1.018 million units, beating market calls for a 1.6% increase..

U.S. housing starts, however, fell 0.2% last month to hit a seasonally adjusted 907,000 units, disappointing expectations for an increase of 3.4% to 910,000 units, though investors viewed the day's data as bullish from an overall take.

Leading Dow Jones Industrial Average performers included Microsoft, up 3.93%, Pfizer, up 1.62%, and UnitedHealth, also up 1.62%.

The Dow Jones Industrial Average's worst performers included Boeing, down 1.09%, McDonald's, down 0.31%, and Procter & Gamble, down 0.09%.

European indices, meanwhile, finished higher.

After the close of European trade, the EURO STOXX 50 rose 0.78%, France's CAC 40 rose 0.97%, while Germany's DAX 30 rose 0.67%. Meanwhile, in the U.K. the FTSE 100 rose 0.56%.

On Wednesday, markets will pay close attention to the Federal Reserve.

The U.S. central bank is to announce its decision on interest rates and monetary policy followed by a press conference with Janet Yellen, her first as head of the monetary authority.

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Crude gains on demand from bargain hunters

Investing.com - Investing.com - Crude prices shot up on Tuesday after bottom fishers snapped up nicely priced positions, erasing earlier losses stemming from mixed U.S. data and expectations that geopolitical concerns in Ukraine won't disrupt oil exports out of Russia.

On the New York Mercantile Exchange, West Texas Intermediate crude for delivery in May traded at $98.75 a barrel during U.S. trading, up 1.15%. New York-traded oil futures hit a session low of $97.29 a barrel and a high of $98.97 a barrel.

The May contract settled down 0.95% at $97.62 a barrel on Monday.

Nymex oil futures were likely to find support at $97.00 a barrel, Monday's low, and resistance at $99.25 a barrel, Friday's high.

Mixed data sent oil prices to levels ripe for bargain hunting on Tuesday.

The Labor Department on Tuesday reported that the U.S. consumer price index slowed to 1.1% in February from 1.6% in January. Analysts had expected the annual inflation rate to decline to 1.2%.

Month-on-month, U.S. consumer prices rose 0.1% in February, in line with forecasts.

Core inflation rates, which are stripped of volatile food and energy prices, rose 1.6% on year and 0.1% month-on-month, both figures in line with market forecasts.

The Federal Reserve plays close attention to core inflation rates when deciding on monetary policy.

Separately, the Commerce Department reported that the number of building permits issued in the U.S. rose to a four-month high in February, rebounding after a sharp drop in January.

The number of building permits issued last month jumped 7.7% to 1.018 million units, beating market calls for a 1.6% increase.

U.S. housing starts, however, fell 0.2% last month to hit a seasonally adjusted 907,000 units, disappointing expectations for an increase of 3.4% to 910,000 units.

The mixed data sent investors rethinking how quickly the U.S. economy moves along its road to recovery and how much energy and fuel it will demand going forward.

Elsewhere, markets breathed a sigh of relief on Tuesday after Russian President Vladimir Putin said that Moscow isn't seeking "a partition of Ukraine," signaling that Russia's moves in the area would be limited.

The speech came one day after President Putin recognized the results of Sunday's referendum in Crimea, which saw a majority of voters opting to split from Ukraine.

The European Union and the U.S. have declared the vote illegal and imposed sanctions.

Oil also edged lower on expectations that the Ukraine crisis won't affect oil shipments, though it got a boost after CNN reported that Ukraine Defense Ministry Spokesman Vladislav Seleznyov said at least one Ukrainian officer had been injured in an assault on a base by "armed people in masks" near the Crimean capital of Simferopol.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for May delivery were up 0.39% and trading at US$106.65 a barrel, while the spread between the Brent and U.S. crude contracts stood at US$7.90 a barrel.

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Gold falls as Crimea vote goes smoothly, shrugs off U.S. sanctions

Investing.com - Investing.com - Gold prices traded lower on Monday after Crimea voted to join Russia and leave Ukraine on Sunday with no widespread violence, while sanctions slapped on Russia by the West were viewed as less intense than expected, which sent the yellow metal slumping.

Gold has served as a safe haven of choice during the Ukraine crisis.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at $1,366.90 a troy ounce during U.S. trading, down 0.88%, up from a session low of $1,362.50 and off a high of $1,392.50.

The April contract settled up 0.48% at $1,379.00 on Friday.

Futures were likely to find support at $1,328.20 a troy ounce, the low from March 10, and resistance at $1,393.80, the high from Sept. 8.

Investors continued to monitor events in Europe, after over 90% of Crimean voters on Sunday chose to break with Ukraine and join Russia. Crimea's Parliament on Monday formally asked to join the Russian Federation.

Sanctions followed as expected.

European Union foreign ministers imposed travel bans and asset freezes on 21 people they have linked to the push to have Crimea secede from Ukraine and be annexed by Russia. U.S. President Barack Obama also imposed sanctions on several Russian officials involved in the incursion of Crimea, which included freezing assets in the U.S.

Still, markets were expecting more widespread action from the West, and the response enticed investors away from safe-haven gold positions.

Investors also took hit-or-miss U.S. economic indicators in stride.

Data revealed earlier that U.S. industrial production rose 0.6% in February, exceeding expectations for a 0.1% gain. Industrial production in January was revised to a 0.2% fall from a previously estimated 0.3% decline.

In a separate report, the Federal Reserve Bank of New York said its Empire State manufacturing index ticked up to 5.6 this month from 4.5 in February, missing expectations for a rise to 6.0.

Meanwhile, silver for May delivery was down 0.90% at US$21.220 a troy ounce, while copper futures for May delivery were up 0.08% at US$2.953 a pound.

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U.S. stocks gain on ebbing Ukraine fears; Dow rises 1.13%

Investing.com - Investing.com - U.S. stocks rose on Monday even after Crimea voted overwhelmingly in favor of becoming part of Russia, as an absence of violence and less sanctions from the West fueled appetite for risk-on assets.

At the close of U.S. trading, the Dow Jones Industrial Average rose 1.13%, the S&P 500 index rose 0.96%, while the Nasdaq Composite index rose 0.81%.

Investors ended the session applauding events in Europe, after over 90% of Crimean voters on Sunday chose to break with Ukraine and join Russia. Crimea's Parliament on Monday formally asked to join the Russian Federation.

Sanctions followed as expected.

European Union foreign ministers imposed travel bans and asset freezes on 21 people they have linked to the push to have Crimea secede from Ukraine and be annexed by Russia. U.S. President Barack Obama also imposed sanctions on several Russian officials involved in the incursion of Crimea, which included freezing assets in the U.S.

Still, markets were expecting more action from the West, and the muted response coupled with an absence of widespread violence in the region sparked appetite for risk-on assets, stocks especially.

Hit-or-miss U.S. economic indicators failed to halt the rally, as investors concluded that when viewed over the long term, the data pointed to an economy that continues to improve and will bolster corporate fundamentals over the long term.

Data revealed earlier that U.S. industrial production rose 0.6% in February, exceeding expectations for a 0.1% gain. Industrial production in January was revised to a 0.2% fall from a previously estimated 0.3% decline.

In a separate report, the Federal Reserve Bank of New York said its Empire State manufacturing index ticked up to 5.6 this month from 4.5 in February, missing expectations for a rise to 6.0.

Leading Dow Jones Industrial Average performers included IBM, up 1.92%, Boeing, up 1.86%, and 3M, also up 1.86%.

The Dow Jones Industrial Average's worst performers included McDonald's, up 0.01%, Coca-Cola, up 0.21%, and Home Depot, up 0.25%.

European indices, meanwhile, finished higher.

After the close of European trade, the EURO STOXX 50 rose 1.52%, France's CAC 40 rose 1.32%, while Germany's DAX 30 rose 1.37%. Meanwhile, in the U.K. the FTSE 100 rose 0.62%.

On Tuesday, the U.S. is to produce data on consumer inflation as well as reports on building permits and housing starts.

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Berkshire opposes dividend proposal; Buffett, Gates get pay rises

REUTERS - Warren Buffett's Berkshire Hathaway Inc has urged shareholders to vote against a proposal that it consider spending some of its $48.2 billion of cash on a "meaningful" dividend .

According to a Berkshire proxy filing on Friday, David Witt, a Cincinnati resident who owns nearly $8,600 of Berkshire stock, will propose the payout at the company's May 3 annual meeting.

Berkshire has not paid a cash dividend since 1967.

"Whereas the corporation has more money than it needs and since the owners unlike Warren are not multi-billionaires, the board shall consider paying a meaningful annual dividend on the shares," Witt's proposal said, referring as Buffett does to shareholders as owners.

Buffett was not immediately available for comment.

His $58.2 billion net worth makes him the world's fourth-richest person, Forbes magazine said this month.

In opposing Witt's proposal, Berkshire's board said it already considers annually whether the Omaha, Nebraska-based company should retain all earnings.

Buffett, 83, has long maintained that he can generate better returns through acquisitions such as the BNSF railroad and investments such as Wells Fargo & Co .

He told shareholders in 2011 that Berkshire's share price ought to fall if the company decided to pay a dividend. Buffett also wants to keep a $20 billion cash cushion.

PAY RISE

"Our shareholders are far wealthier today than they would be if the funds we used for acquisitions had instead been devoted to share repurchases or dividends," he said in his March 2013 annual letter.

"Though large transactions of the BNSF kind will be rare, there are still some whales in the ocean."

Berkshire also urged shareholders to vote against a proposal that it set goals for its energy businesses to reduce greenhouse gas and other emissions. Similar proposals failed in 2011 and 2013.

Buffett controls one-third of Berkshire's voting power. Shareholder proposals that Berkshire opposes typically fail by overwhelming margins.

Berkshire also disclosed that Buffett's compensation rose 15 percent last year to $485,606. That includes his usual $100,000 salary, plus $385,606 for personal and home security.

The company also said it paid most directors an extra $300 last year. That meant Bill Gates, the Microsoft Corp co-founder and world's richest person, was awarded $2,100 last year for his work as a Berkshire director.

Gates is worth $76 billion, Forbes said.

(Reporting by Jonathan Stempel in New York,; additional reporting by Luciana Lopez; Editing by Sophie Hares)

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Forex - China widens yuan trading band to 2% at weekend

Investing.com - Investing.com - China widened the range in which the yuan can fluctuate against the U.S. dollar at the weekend, signalling it could accept more volatility for the exchange rate and challenge the perception that the currency is a one-way bet.

The People's Bank of China said Saturday the yuan will be allowed to move 2% either side of the central parity against the dollar starting from Monday, doubling the previous 1% range.

China has pledged to make the yuan more flexible since 2005 when the currency was originally unshackled from its dollar peg and the country has a longer-term aim for a fully convertible yuan that was enshrined by the Communist Party at a meeting last November.

The government is committed to gradually dismantling China's capital account regime, but foreign exchange reserves are expected to rise sharply again this year, from $3.8 trillion to well over $4 trillion.

The weekend move was the third since July 2005 and follows a widening from 0.5% in April 2012.

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India welcomes the spring festival with rising temperatures

Holi is the most vibrant of all the festivals celebrated in India. Filled with fun and frolic, the joy of this Hindu festival of colour knows no bound. Holi marks the beginning of the spring season and is famous as Basant Utsav in rural India. Winter has receded from most parts of the country and with temperatures soaring, it wouldn`t be cruel to get your loved ones soaked in a pool of coloured water. The weather will remain dry and thus, not dampen the spirits of people.

The spirit of Holi is remarkable across the country and brings an essence of enthusiasm among people of all ages. Let's find out how this festival is celebrated in different parts of the country and the weather in India during Holi.

Celebrations in Delhi

Dilwalon ki Dilli rules the roost when it comes to Holi. It is a boisterous affair in the national capital and be prepared to get hit by few water balloons even few days before Holi. It's worth going for the Holi Cow festival held in periphery of Delhi. It's special because only non-toxic colours are provided in this festival. This year the organisers promise a bigger, better and louder party with exciting disc jockeys, lots of food and maybe evenbhang.

According to the latest weather update by Skymet Meteorology Division in India, winter has receded here as well and you could expect the day temperature to reach 32°C on the 17th of March. We cannot rule out the possibility of someisolated rain but only towards late evening.

Celebrations in Goa

The lively people of Goa do not lag behind in celebrating the spring festival called Shigmo. The festival is celebrated with vibrant colours of gulal and followed by epic enactment of mythology. The Shigmotsav Samiti also parades and the various temples also engage in preparations for more than a week for Holi celebrations.

It's worth visiting Panaji, Mapusa, Vasco Da Gama and Margao during this time if the soaring temperatures with maximums hovering around 37°C, is not a cause of concern for you.

Celebrations in Kolkata

This festival has a different charm in West Bengal. Nobel Laureate Rabindranath Tagore started the celebration of Basanta Utsav in the Vishva Bharati University of Shantiniketan. This Small town near Bolpur is approximately 180 kilometres north of Kolkata. Students here organise cultural programs and it is a treat to watch them perform Rabindra Nitya on his songs. It is followed by playing with abeer. Rain is not likely in this part of the country during this annual function.

picture courtesy- festivals advices

By: Skymetweather.com

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Dynamics of Indian indices: Motivators dampeners

Prashant Sharma
Max Life Insurance

India's equity markets have witnessed extreme volatility in the last six months. While flows and sentiments deteriorated during the first half of this fiscal, a slew of measures announced by RBI governor Dr. Raghuram Rajan, positive performance of China's economy and deferment of QE tapering by the US Fed raised investor sentiment in later months. However, the sharp market rally in a relatively short period of time is more based on sentiments and hope.

Domestic Dynamics
India is among the five largest economies on the basis of purchasing power parity. Its economy is much more integrated with the world economy than in the past and it is no longer possible to remain insulated from developments in the global market. Most countries – developed nations of Europe or emerging economies like China are facing slowdown in their economic growth rates. All these developments have adversely affected India too. Indian economic growth hit a low of 5% in the financial year ended March 31, 2013 and further slowed in the first quarter of FY14. Inspite of that, India has the highest growth rate after China among the large economies.

Key risks to India's economy are high inflation, high interest rates, and lower economic growth. Inflation is particularly high in agricultural commodities owing to factors such as structural changes, supply-side issues and higher aspirations.

Apart from agriculture, core inflationary levels are within the RBI's comfort zone and we expect the trajectory to move downwards in the short-term. A key positive in the second half of FY14 would be  pick-up in rural economy due to increased agricultural production aided by good monsoons which will also help in lowering agricultural inflation. With the rupee stabilizing and RBI's recent actions, India's macro-economic environment is showing some signs of recovery. In the immediate term, slowdown risks could come from the Government contracting spending to contain its fiscal deficit and a lack of pick up in Industrial and service sectors.

While the measures announced by the RBI are intended to achieve the dual objectives of economic growth and inflation control, it will take some time before we can see some tangible results.

External Cues
The Federal Reserve deferred QE tapering, which has caused a rally in risky assets including emerging markets equity. Flows from Foreign Institutional Investors (FIIs) have improved substantially following the deferment of tapering. FIIs have invested USD 2 billion each in September and October 2013. A large proportion of these flows are consequent to their increased allocations in emerging markets ETF investments.

Whenever the US Fed decides to taper, investors will be less worried about the consequences as India's foreign vulnerability has reduced since July 2013 as current account deficit (CAD) has significantly contracted and foreign exchange reserves have been boosted through FCNRB swaps and other instruments.

Future Upbeat
Long term prospects of Indian economy remain strong. Stock markets however are susceptible to volatility in the run-up to the general elections in May 2014. Although markets and investors are party-agnostic, a stable political landscape lends itself to optimal performance. If the upcoming elections are successful in achieving this objective, we can expect increased inflows from institutional investors, both foreign and domestic.

Economic activity is forecasted to pick-up in the second half of the financial year owing to better agricultural output. The macro-economic environment is recuperating against the backdrop of improved global cues. We see value in selective IT, infrastructure and media stocks and are underweight on FMCG stocks.

(Prashant Sharma is Chief Investment Officer Max Life Insurance; the views expressed by the author are his own and do not in any way reflect the views of the company)

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