Allianz SE’s Mohamed El-Erian said that Fed officials need to consider the costs of keeping interest rates low, warning that it could create distortions in financial markets, punishing savers and encouraging trades by bond investors looking for better yields.
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Euro inched higher against the greenback on Monday as traders avoided making bets ahead of a speech from the Federal Reserve Chair on Friday, while comments from another top Fed official kept the greenback stable.
Platinum was down 1.19 per cent at $US1,097.25, after falling to its lowest in almost a month.
Meanwhile, crude futures came under pressure on Monday, as analysts showed doubt over whether leading oil producers would successfully tackle the supply glut seen the market.
The dollar topped ¥100.80 in early trading, after U.S. Federal Reserve Vice Chairman Stanley Fischer made comments Sunday that were taken as hinting at a rate hike this year, market sources said.
Brent crude futures were trading at $49.94 per barrel at 0712 GMT (12:42 p.m.in India), down $1.56, or 3.07 per cent. The Standard & Poor’s 500 index lost a point, or 0.03 percent, to 2,183 and the Nasdaq composite rose three points, or 0.1 percent, to 5,242.
Asia shares inched ahead while oil fell for a second session on Tuesday, as investors awaited guidance on whether the Federal Reserve will raise US interest rates this year.
The meeting comes on the heels of a mildly hawkish Fed meeting minutes and chatter from various central bankers that a September rate hike could be feasible. In the previous session, USA indexes ended lower with utilities slipping more than 1 percent.
The dollar fell, halting a two-day advance, on speculation Federal Reserve Chair Janet Yellen will stop short this week of affirming the central bank will raise interest rates by year-end.
USA stocks ticked lower Monday at the start of a trading week that could be defined by Federal Reserve Chair Janet Yellen’s much-anticipated speech Friday on the economy and interest-rate policy. “Inflation is starting to pick up, employment is pretty much at the natural rate, so everything is coming together to suggest there’s a very high probability of a rate hike before the end of the year”, Dan Smith, analyst at Oxford Economics, said.
In Europe, the Stoxx 600 Index ended the session with a 0.1 percent slip from the previous close, as a drop in mining stocks weighed on the market.
ENERGY WEAKNESS: Oil prices fell sharply.
Gold fell to its lowest in two weeks on talk of possible US rate hikes, before recovering slightly.
Indeed, U.S. Treasuries actually rallied on Monday, with 10-year yields at 1.55 percent after falling 4 basis points overnight.
As for other precious metals, Comex silver for September delivery tumbled 46.7 cents or 2.4 percent to $18.850 per ounce – the lowest price since July 1.
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Spot gold was down 0.21 percent at $1,338.43 an ounce, having hit a low of 1,331.35 an ounce at one stage.
