Those expectations had been bolstered by comments from New York Fed chief William Dudley on Tuesday, who said the central bank could possibly raise rates as soon as September. USA rates are considered to be on a higher path than much of the rest of the developed world, but a go-slow Fed has helped pad gold’s 27% year-to-date gain. Also on tap today were a couple of Fed speakers. The contract was trading slightly lower the current price before the release.
Advertisement
Copper for September delivery on the Comex division of the New York Mercantile Exchange ticked down 1.35 or 0.6 percent to $2.1585 per pound.
“I still think the Fed will stay on hold, but the pendulum of market thinking, and risk sentiment, is going to swing toward “higher rates sooner” which should support the USA dollar and potentially curtail recent stock market gains”, Dolan concluded. “You have seen some stronger employment data, but other pieces of data are showing a struggle still – retail sales, inflation reads have been among recent disappointments”. The BOJ, which underwhelmed the markets in July with what many investors deemed were token easing steps, will conduct a comprehensive policy review in September.”Policy uncertainty has been weighing on Japanese bonds for a while and now the currency market seems to be taking notice as well”, said Makoto Noji, a senior strategist at SMBC Nikko Securities in Tokyo.Analysts say Japan’s debt m, arket has been unsettled by speculation that the BOJ would choose against taking interest rates deeper into negative territory or increasing its bond buying. USA stocks pulled back from record levels, boosting the appeal of holding nonyielding gold. And with the headline inflation rate still subdued, the Fed is in a position where it can afford to remain in wait-and-see mode.
Federal funds futures on Thursday implied traders saw a 48.8 percent chance of a Fed rate hike this year, according to data from CME Group (Kuala Lumpur: 7018.KL – news) ‘s FedWatch program.
The dollar edged off 7-week lows against the yen and euro on Wednesday following hawkish comments from Federal Reserve officials, but scepticism about the Fed’s willingness to tighten policy limited the bounce. Trade has ranged from $2.1465 to $2.1750.
Advertisement
The dollar also weakened against the British pound, which was threatening earlier this week to test the three-decade low it hit last month on worries United Kingdom data this week could provide the first proof of economic damage from the Brexit vote.
