Markets discount hawkish Fed comments

The Nikkei Stock Average NIK, -0.61% was trading 0.3% lower on yen strength, while Australia’s S&P/ASX 200 XJO, +0.70% rose 0.8% higher as demand for dollar-denominated metals increased as they became cheaper to buy.


Hints late last week from several Federal Reserve officials that a USA interest-rate rise was still possible this year sent the dollar much higher against regional currencies on Monday.

Employment has increased impressively over the past six years since its low point in early 2010, and the unemployment rate has hovered near 5 percent since August of last year, close to most estimates of the full-employment rate of unemployment.

Also in his speech, the Fed vice chair mentioned the economic turbulence the US had faced in the past few years including the Greek debt crisis, the Chinese growth slowdown, the decline in oil prices and Britain’s vote to leave the European Union.

Across the pond, the British pound continued to trade in a lower range.

The U.S. dollar rose Monday in Asian trade on renewed hopes for a possible U.S. rate hike this year following hawkish comments from the vice chairman of the Federal Reserve. The political uncertainty surrounding Brexit has darkened Britain’s economic, business and investment outlook, and the Bank of England’s first interest rate cut in seven years and relaunch of its quantitative easing programme this month has only piled on more pain for sterling. Better-than-expected jobless claims data also lifted the currency.

The euro edged up 0.1 percent to $1.1332, stepping off an overnight low of $1.1271.

USD/CAD is supported at 1.2900 levels and is trading at 1.2941 levels.

In commodities, oil prices gave back some of last week’s gains in belated response to rising United States oil rigs.

Meanwhile, the technology-heavy Nasdaq Composite Index (NYSEARCA:QQQ) pared gains to finish up 0.1%. May was also revised upward, to 1.9 percent.

Fischer said he thought the Fed was close to achieving its employment and inflation targets. The keynote speech will be delivered by Fed Chair Janet Yellen on Friday. The S&P 500 was down 7.87 points, or 0.36 per cent, at 2,176.

AUD/USD is supported around 0.7583 levels and now trading at 0.7630 levels.

Asian stocks closed lower, while U.S. stock futures pointed to a weaker open for Wall Street shares.

US stock index futures were lower on Monday, as oil prices fell the most in four weeks and dollar strengthened in anticipation of an interest rate increase this year.

The Australian dollar was up 0.1 percent at $0.7638, moving up on the coattails of the kiwi.

Michael Hewson, chief market analyst at CMC Markets UK, said r ate hike talk from US Federal Reserve officials was also pushing stocks into negative territory.

“Despite some signs of improvements in the US economy, particularly in the labor market, a rate hike is probably a 2017 story”. London’s FTSE 100 was up 1.3 points at 6,860.31.

Wall Street looked set for a lower open on Monday as oil prices dropped the most in four weeks and dollar strengthened on bets of an interest rate hike in the coming months.

They are left wondering if Fed Chairwoman Janet Yellen, who speaks Friday at the Fed’s symposium in Jackson Hole, Wyo., will follow the moves of other Fed board members who have indicated in recent speeches that the central bank will soon act to slow the economy. Regeneron Pharmaceuticals, Vertex Pharmaceuticals and Alexion Pharmaceuticals all were up 3 percent or more. Brent crude, used to price global oils, tumbled 83 cents to $50.05 per barrel in London.


Gold fell on Monday to its lowest in two weeks on talk of possible U.S. rate hikes, before recovering slightly. “Considering that U.K. PMIs took a nosedive recently, investors will be watching the Eurozone PMIs carefully”, wrote Kathy Lien, managing director of FX strategy at BK Asset Management.

Asian shares slip, dollar stands tall on Fed hike bets