Investors reacted to the Fed minutes by sending the dollar and yields on treasury bonds lower, while US stocks reversed early losses to close slightly higher.The utilities sector leading the S&P 500 rising 1.49% for the day, is another sign of investors disbelieve that a rate hike will happen in September.
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Comments from senior Fed officials in recent days that suggest a bias toward raising benchmark USA interest rates have pushed investors to reexamine minutes from the US central bank’s most recent meeting in July, analysts said.
Michael Hewson, chief market analyst at CMC Markets UK, said “While no one seriously expects the Federal Reserve to act on rates next month, some Fed officials seem extremely keen to try and keep the option on the table, with both the NY and California Fed President’s Dudley and Williams the most vocal, along with Fischer’s comments at the weekend”.
Later in the morning, however, the US currency was lifted above the psychologically important line on buying to cover short positions, and temporarily surpassed ¥100.40 on periodic purchases from Japanese importers.
European stocks fell 0.11 percent, having received a temporary boost in early trading by Syngenta after its proposed takeover by ChemChina was approved by US regulators.
“ETF accumulation has stopped while hedge funds cut longs in five out of the past six weeks”, Saxo Bank’s head of commodity research, Ole Hansen, said.
The yen weakened 0.2 per cent to 100.13 per dollar, paring its weekly gain to 1.2 per cent.
FED WATCH: Investors are looking ahead to a speech by Fed chair Janet Yellen at an annual summer gathering in Jackson Hole for indications of how policymakers view the outlook for economic growth and interest rates.
The price of oil took another tumble as analysts were gloomy over the prospect of a talk between producers leading to a drop in supply.
In early trading, France’s CAC-40 rose 1.5 percent to 4,410.55 points and Germany’s DAX advanced 0.8 percent to 10,633.55. The Nasdaq composite rose 0.2 percent to 5,240.15.
Medivation Inc.’s stock soared more than 19 percent before the opening bell Monday. Australian shares.AXJO added 0.2 percent, heading for a 0.2 percent decline for the week. Brent lost 0.6 percent to $50.57.
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But later in the morning, the dollar was buoyed above ¥100.10 by buybacks following media reports that the Bank of Japan, the Finance Ministry and the Financial Services Agency were to hold a three-way meeting, traders said. US benchmark crude lost $1.26 to $47.83 a barrel and Brent crude, used to price oil internationally, declined $1.01 to $49.81 a barrel. European shares fell 1.14 per cent on the day and 2 per cent for the week, their biggest weekly loss since mid-June.
