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While you were sleeping: Fed's ultra pledge

Wednesday 7th April 2010

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Stocks mostly edged higher overnight on hopes for the U.S. economic recovery and after the Federal Reserve again confirmed interest rates would remain ultra-low for a lot longer than many investors have been betting.

In minutes from its latest policy meeting released overnight, Fed officials indicated they were in no hurry to push rates higher.

“The duration of the extended period prior to policy firming might last for quite some time and could even increase if the economic outlook worsened appreciably or if trend inflation appeared to be declining further,” the minutes said.

“Such forward guidance would not limit the committee's ability to commence monetary policy tightening promptly,” they said.

The Dow Jones industrial average shed 3.56 points, or 0.03%, to close unofficially at 10,969.99. The Standard & Poor's 500 Index gained 2.00 points, or 0.17%, to end unofficially at 1,189.44. The Nasdaq Composite Index rose 7.28 points, or 0.30%, to finish unofficially at 2,436.81.

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’ fell 3.76% to 16.38.

The Dow Jones STOXX 600 edged 0.7% higher to 269.37.

The U.K.’s FTSE 100 rose 0.62%, Germany’s DAX advanced 0.27% and France’s CAC added 0.49%.

Among the most actives were Boliden AB, Euler Hermes SA, National Bank of Greece SA.

Commodities producers including Xstrata rose on hopes for rising demand on the back of the latest series of reports on the strengthening U.S. economy.

The Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.29% to 81.33.

The euro fell 0.6% to US$1.3404 in New York, from US$1.3484 yesterday. The euro fell 1.2%  to 125.67 yen, from 127.25.

The yen rose 0.7% to 93.75 per dollar, from 94.37 yesterday, when it traded at 94.79, the weakest level since late August.

The Canadian dollar reached parity with the U.S. currency, as crude oil for May delivery touched US$87.09 a barrel in New York, the highest level on an intraday basis since October 9, 2008.

The Canadian dollar has advanced 5.3% against the U.S. dollar this year as oil, Canada’s largest export, gained 9.4%.

As far as the yuan’s outlook is concerned, China will ultimately decide more yuan flexibility would benefit it, U.S. Treasury Secretary Timothy Geithner said on Tuesday as Beijing defended its currency policy and said any changes would be on its own terms.

Geithner, who told Indian television the global economic recovery "looks quite strong now," also said it was "China's choice" whether or not it revalues the yuan. Reuters reported on the television interview.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, fell 0.35% to 278.52.

Oil climbed above US$87 for the first time since October 2008 as growth in American jobs and service industries spurred anticipation that the economy is recovering from the worst recession since the 1930s.

A government report tomorrow will probably show that U.S. fuel stockpiles declined, Bloomberg said.

Crude oil for May delivery rose 22 cents, or 0.3%, to US$86.84 a barrel on the New York Mercantile Exchange, the highest settlement since October 8, 2008. Futures reached US$87.09, the highest intraday level since October 9, 2008.

Copper for three-month delivery on the London Metal Exchange closed at US$7990 a tonne in official rings, from US$7885 at the close on Thursday. The metal used in power and construction earlier hit US$8010.

Copper for May delivery was up 0.10 cent at US$3.6325 per lb by 1455 GMT on the NYMEX's COMEX division.

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