“The dollar is getting support from Dudley’s general reference to the market being too complacent about Fed hikes between now and end-2017”, said Gareth Berry, a foreign-exchange and rates strategist in Singapore at Macquarie Bank Ltd.
Advertisement
European shares retreated from seven-week highs, weighed down by industrial stocks, with markets in London, Paris and Frankfurt all about 0.5 per cent lower.
Mr Dudley, a permanent voter on rates and a close ally of Fed Chair Janet Yellen, gave the market-moving interview nine days before an annual meeting of top central bankers in Jackson Hole, Wyoming, a venue the Fed often uses to telegraph policy plans.
The number of people claiming unemployment benefits in the United Kingdom decreased by 8.6 thousand in July 2016, following an upwardly revised 0.9 thousand gain in the previous month.
The US consumer price index increased 0.8 percent in July, from a year ago, still well below the Fed’s 2 percent target.
US stocks fell overnight in reaction to hawkish comments from Fed officials and mixed data on consumer inflation, housing starts, building permits and industrial production.
The pan-European STOXX 600 was up 0.36 percent.
The market is now pricing in a 15% chance of a September rate increase and a 52% probability for it happening in December.
The dollar’s index against a basket of six major currencies .DXY plunged as low as 94.426 on Tuesday, its lowest level since Britain voted to leave the European Union in June.
Cisco Systems Inc.(CSCO) slipped 0.1% in thin premarket trade after a report the networking company plans to lay off nearly 20% of its workforce (http://www.marketwatch.com/story/cisco-to-lay-off-almost-20-of-workforce-report-2016-08-17). It was up 0.5 percent at 100.81 yen, having fallen as low as 99.550 yen in the previous session, its lowest since the stormy aftermath of the Brexit referendum on June 24 sent investors scrambling for the perceived security of Japan. It also hit a three-year low of 87.245 pence per euro on Tuesday after United Kingdom inflation came in stronger than expected.
The British pound, which touched a five-week low against the dollar on Monday, held steady following gains of 1.3 percent on Tuesday. If the Fed is of the belief that Brexit will have limited impact on the economy and the outlook remains as it was prior to the vote, then a rate hike this year remains a very real possibility.
Brent crude futures hit their highest point since July 7, but were last up 1.2 per cent to $48.93 per barrel.
The three indexes ended lower on Tuesday after Dudley’s comments.
The pound is bracing for United Kingdom jobless data later in the day.
Broader sentiment also took a hit as oil prices pulled away from 5-week highs in early trade today, as analysts doubted possible producer talks to restrain oversupply would be successful.
Advertisement
Brent crude futures LCOc1 dropped 0.6 percent to $48.92 a barrel, while USA crude CLc1 retreated 0.4 percent to $46.40.
