Yellen’s speech there will be closely watched for hints about US monetary policy and what it says about the path of interest rates. Sterling traded above $1.3200 to hit three-week high on Wednesday, as investors continued to cut bearish bets against the currency after recent data indicated that United Kingdom economy was holding up surprisingly well after the Brexit vote. Energy companies fell along with the price of oil while biotechnology and drug companies rose after Pfizer announced it was buying a cancer drug maker. Stocks were moving mostly lower in early trading Monday, Aug. 22, 2016, as investors looked ahead to the Fed’s meeting in Jackson Hole, Wyo., for clues on timing for possible interest rate hikes. The stock was the top percentage gainer on the S&P 500.
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“It seems that it would require a quite noticeably more hawkish Yellen speech than we’ve seen in recent times to stop the USA dollar selling off and U.S. bonds continuing to rally on Friday”.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 peers, rose 0.2 percent as of 4 p.m.in NY as speculation on higher borrowing costs boosted the currency’s appeal. Brent crude, used to price oil internationally, dropped 45 cents to $48.71 a barrel. It hit session high at 0.7631 and made session lows at 0.7596 levels.
A man walks past the Federal Reserve Bank in Washington DC.
The British pound, meanwhile, rose to a three-week high against the dollar at $1.3227 GBP= .
Yellen, who didn’t attend a year ago, has shown less interest in telegraphing changes with her remarks at Jackson Hole.
Dollar strength helped push gold lower on Wednesday.
UK’s benchmark FTSE 100 closed down by 0.5 percent, the pan-European FTSEurofirst 300 ended the day up by 0.28 percent, Germany’s Dax ended up by 0.3 percent, France’s CAC finished the day up by 0.3 percent.
The main issue is that the stimulation starts with the nominal Fed funds rate at either 2 percent or 3 percent, compared with 0.5 percent now, and Englander says that the paper’s correct premise – that the effectiveness of policy tools to stimulate activity increases the higher the benchmark policy rate is before a shock kicks in – actually reveals the Fed’s inability to deal with a USA recession within the next two years.
The Federal Reserve is close to hitting its targets for full employment and two per cent inflation, the Fed’s No. 2 policymaker said on Sunday in comments that did not address when the United States central bank should next raise interest rates.
The U.K.’s FTSE 100 index is now up 0.45 percent or 31.07 points at 6,859, France’s CAC 40 index is up 0.82 percent or 36.05 points at 4,425 and Germany’s DAX is up 0.93 percent or 97.28 points at 10,591. The yields have traded between 1.45 percent and 1.63 percent since mid-July.
Gold futures suffered a sharp loss on Wednesday as traders hoped for some clarity on the near-term path for US interest rates from Federal Reserve Chairwoman Janet Yellen’s speech later this week.
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Spot gold was down 1 percent at $1,324.66 an ounce by 3:06 p.m. EDT (1906 GMT). The drop in energy prices dragged down energy stocks, which lost 1.1 percent, more than the rest of the market.
