Comments from Fed policymakers in recent days that suggest a bias toward raising benchmark USA interest rates have pushed investors to re-examine minutes from the United States central bank’s most recent meeting in July, analysts said.
Advertisement
“Under these conditions, it makes sense for the Fed to gradually move interest rates toward more normal levels”. San Francisco Fed President John Williams on Thursday joined a growing chorus of his colleagues signalling support for a US interest rate hike in coming months. Williams does not have a vote on Fed policy this year, but his views are seen as influential due to his longstanding relationship with Fed chairwoman Janet Yellen.
The Dow Jones industrial average fell 52.28 points, or 0.28 per cent, to 18,545.42, the S&P 500 lost 5.75 points, or 0.26 per cent, to 2,181.27 and the Nasdaq Composite dropped 8.91 points, or 0.17 per cent, to 5,231.24.
“There is a bit on uncertainty over the Fed’s decision and Yellen’s speech next week is motivating investors to take some money off the table”, said Peter Cardillo, chief market economist at First Standard Financial in NY.
Saying he is in no hurry to raise rates, Williams nevertheless warned that the economy could overheat if rates are kept low for too long, like a party at which the host fails to remove the punch bowl. Williams and other top global central bankers gather next week near Jackson, Wyoming., where Yellen is expected to give her views on when and how fast the Fed ought to be raising rates.
Silver was up 0.6 per cent at $US19.79 an ounce, after touching a more than three-week low on Wednesday.
Trading volumes were thin amid a summer lull in the US and Europe. The metal remains 0.9 percent higher this week.
“For the first time in quite a while, gains in middle-wage jobs actually outnumber gains in higher- and lower-wage jobs nationwide”, said Dudley, a permanent voter on USA interest rate policy and a close ally of Fed Chair Janet Yellen.
The dollar firmed against six major world rivals given revived Fed rate-hike expectations.
The CME Fed Watch Tool now sees a 53% chance of a rate hike at the December meeting.
The dollar index, which tracks the greenback against a basket of six peers, rose 0.2% to 94.367.
European stocks looked set for a similar soggy start, with spreadbetters expecting Britain’s FTSE 100 and Germany’s DAX to open 0.2 percent lower, and France’s CAC 40 to be down 0.3 per cent.
Advertisement
The US currency gained 0.4% to ¥100.23.
