Daily FX Update, 26 May 2015 OVERNIGHT MARKET UPDATE

·         US Federal Reserve Vice Chairman Stanley Fischer, speaking in Israel noted: "What we are thinking about is raising the interest rate from zero, which is an ultra expansionary monetary policy to a quarter percent, which is an extremely expansionary monetary policy. This will be a gradual process”. Meanwhile, he also mentioned that the processes are not date determined, but are data determined.

·         Federal Reserve Bank of Cleveland President Loretta Mester noted (during an interview in Iceland) that the “time is near” for the central bank to raise its benchmark rate and will go into its June meeting with an “open mind”. Mester will be a voting member of the Federal Open Market Committee next year.       

·         With London and New York both closed currency markets were essentially unchanged. However, there was a very mild USD bid tone evident.           

·         US bond markets were closed, although US futures saw a small fall in yield overnight.  

·         European shares fell in lacklustre and thin trading. The French CAC 40 closed down 0.5%, Spain’s IBEX fell 2.0% following regional and local elections, which punished the ruling party. Greece’s Athex index fell 3.1%, with the broader Euro Stoxx 50 down 0.6%.                         

·         Crude oil prices were essentially unchanged, with WTI crude prices remaining around USD60/bbl and Brent prices at USD65/bbl. The hurdle for Brent prices to break USD70/bbl to the topside is getting increasingly high. Crude oil markets were supported by a reported decline in US production and crude oil inventories last week but prices failed to re-test the highs set earlier in the month.            

The gold market, like currency markets, was little changed given both London and New York were closed. The intraday range for gold was tight at USD7/oz with prices closing at USD1202/oz.