Investors will pore over the minutes of the Fed’s July policy meeting, scheduled for release on Wednesday, for clues on the United States central bank’s rate plans after recent blowout jobs data.
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MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.3 percent while Japan’s Nikkei closed 0.9 percent higher, paring some of Tuesday’s sharp losses, thanks to a weaker yen. However, the minutes from the July meeting, released on Wednesday, seemed to pour cold water on the idea of a September rate hike.
Shares in Linde surged 11 percent after the company confirmed merger talks with USA industrial gas supplier Praxair to create a market leader with a value of more than $60 billion.
Dudley said such estimates are “too low” and that “the market is complacent about the need for gradually snugging up short-term interest rates over the next year or so”.
Investors expect about one rate hike between now and the end of next year, according to federal funds futures contracts, and they marked up probabilities slightly on Tuesday.
Platinum was down 0.14 percent at $1,110, while palladium fell 0.43 percent to $697.
St. Louis Fed President James Bullard is scheduled to speak on the economy at 1 p.m., before investors parse minutes from the central bank’s July meeting, due at 2 p.m.in Washington, for more clarity on policy makers’ views.
Federal funds futures fell in the wake of comments from New York’s Dudley, who said the USA central bank could possibly raise interest rates in September if the economy improves further. The minutes show that as a result, the officials thought a rate increase “was or would soon be warranted”. Overall, inflation is up just 0.8% over the previous year.
Gold treads water: Gold was little changed on Wednesday as hawkish comments from US Federal Reserve officials raised bets on a rate hike this year and traders await minutes of the July Fed policy meeting for more clues. MSCI’s emerging market index was last down 0.93%.
At 13:06 p.m. ET (1706 GMT), the Dow Jones industrial average .DJI was down 22.29 points, or 0.12 percent, at 18,529.73, the S&P 500 .SPX was down 2.5 points, or 0.11 percent, at 2,175.65 and the Nasdaq Composite index .IXIC was down 7.86 points, or 0.15 percent, at 5,219.25. The ICE dollar index added 0.1% to 94.909.
In late NY trading, the euro rose to 1.1275 dollars from 1.1185 dollars of the previous session, and the British pound climbed to 1.3036 dollars from 1.2874 dollars. “Both sides are waiting for more economic data to determine the trend”, said Jiang Shu, chief analyst at Shandong Gold Group. The WSJ Dollar Index fell to its lowest level since the June 24 Brexit vote on Tuesday. It also hit a three-year low of 87.245 pence per euro on Tuesday after United Kingdom inflation came in stronger than expected.
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Investors will look to the British employment data later in the session to see if the pound can solidify its position.
