US Fed Chair Yellen dovish on a rate rise.

US Federal Reserve Chair Janet Yellen testified before Congress on Tuesday and said it would be several months before the US Fed raised the official cash rate from 0.25%. This was a change from her January comments which suggested a potential second quarter rate rise and goes to show that the US Fed is taking a very slow and steady approach to its first interest rate rise.

Art Cashin noted in commentary on CNBC that Yellen gave herself a lot of wiggle room in relationship to the style of her comments on when the US Fed may tighten but based on her comments today it is clear the market should not expect the US Fed to tighten interest rates before June at the earliest.

The Fed Chair said the Central Bank would not raise rates until it found “confidence in the economy” with concerns still being around jobs growth, inflation and energy prices. I just wonder how good the US Fed really wants to get it as the USA has an unemployment rate that is the envy of the developed world right now, inflation that is under control and oil prices at levels we haven’t seen in years.

Full story in Today's GoldRock Insider Report: www.LTGGoldRock.com

Greece strikes a 4-month debt deal.

In the early hours of Saturday morning Sydney time Greece finally struck a deal with the Troika and its creditors for a 4-month extension on its debt and austerity arrangements. The deal struck will ensure Greece does not need to roll over and declare bankruptcy, as it would have needed to do without the debt extension.

Rather than turn the money tap off on Greece it will continue to receive bail out funds for another 4 months to allow it time to convince the Troika and its creditors that it requires some slack in its austerity program. The Greek Government must submit a list of economic measures that it will undertake by Monday to ensure the deal holds together so it is unlikely the current drama simply moves to the back burner. 

The full article is featured in today's LTG GoldRock Insider Report.

The ECB meets on Greece today.

The ECB is set to meet today to discuss the ongoing Greece debt saga. Bloomberg is reporting this morning that Greece is potentially going to accept a 6 month extension to its bail out program and thus avoiding what would be financial disaster. This deal would go some way to explaining why European and US stock indexes finished higher along with the Euro.

European leaders seem to be united in their call for Greece to stay within its austerity program and to accept a 6 month extension. There appears to be no European support for the Greek Finance Minister and his Prime Minister. Greece has two options. Either dig their heels in and ultimately commit financial suicide or accept the offer that is on the table and eat some humble Greek pie in front of their own electorate and admit the mandate they campaigned on failed when they won office and tried to have austerity immediately changed.

The newly elected Greek Prime Minister ran a very strong election campaign promising to get Greece’s austerity program immediately changed but in reality he only said it to get elected. 

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China’s weak inflation stokes thoughts of stimulus.

China’s inflation slowed in January to 0.8%, which was below the 1% economists expected and well below last January’s 1.5% figure. The Aussie Dollar initially started to fall on the news until traders figured out that such a sharp year on year fall in inflation will likely see the People’s Bank of China inject fresh stimulus and also lower the amount of cash banks in China need to keep on deposit. This sent the Aussie Dollar higher on PBOC stimulus hopes.

So if you are wondering why the Aussie Dollar rose after a very poor inflation figure out of China it is because whenever China’s economy has weakened the Chinese Government has stepped in and added stimulus which gives hope to mining companies. China might buy more of our Ore and Coal, which in turn helps the Aussie economy.

Each week Andrew Barnett, Senior Trader at LTG GoldRock runs a live Trading Room Session Monday at 8pm AEDST.