Yellen is scheduled to address a meeting of central bankers in Jackson Hole, Wyoming.
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Yellen is scheduled to speak on the USA economy and monetary policy Friday against a backdrop of recent hawkish rhetoric from two of her top lieutenants, New York Fed President William Dudley and Fed Vice Chairman Stanley Fischer.
A raft of US housing data due later in the day was not seen as likely to move the dollar much ahead of the all-important Jackson Hole meeting. The report from the National Association of Realtors showed US new home sales surged to almost a nine-year high last month.
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.
Spot gold is trading in tight range on Wednesday in London between $1340 and $1335 per ounce. However, the currency pair retreated in the early USA session as traders booked profits unwinding bullish bets against the currency pair. The euro was flat at United States dollars 1.1262 after edging down 0.4 percent overnight.
The intraday USDCAD technicals are bullish while prices are above 1.2890 supported by the trend line from June which comes into play at 1.2760.
The simplified key levels that should be watched should US Dollar strength emerge is the 12,000/100 zone. Oil fell on an unexpected increase in USA crude stockpiles that revived worries about the supply glut that has capped prices for the past two years.
Investors largely remained on the sidelines as they await Yellen’s speech at the Fed’s annual symposium in Jackson Hole, Wyo., for more clarity on the central bank’s timeline for raising short-term rates. The US unit crept up after falling the previous day but was unable to break out of recent trading ranges. It hit session high at 0.7631 and made session lows at 0.7596 levels. “She would have to give a strong signal to convince markets they are likely to go in September, and I don’t think she’ll want to do that either”. The dollar index, which tracks the USA unit against a basket of six major rivals, was up 0.1 percent at 94.650.
“The talk is that expectations are that the Fed, after the Jackson Hole meeting, will come out more hawkish than suspected”.
Wall Street was lower on Wednesday, led by declines in technology and defensive stocks as investors weighed up the possibility of a rate hike in the coming months.
The Dow Jones industrial average fell 52.77 points, or 0.28 percent, to 18,494.53, the S&P 500 lost 8.65 points, or 0.4 percent, to 2,178.25 and the Nasdaq Composite dropped 31.30 points, or 0.6 percent, to 5,228.78.
US futures were off Tuesday night on Day 2 of Janet-Yellen-is-speaking-on-Friday week, in which investors are hesitant to make big moves until they get their latest signal of if and when the Federal Reserve might hike interest rates.
Traders are pricing in a 26 percent chance that the Fed will raise its benchmark rate in September.
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Wall Street moved lower ahead of Friday’s speech by Federal Reserve Chair Janet Yellen who might offer clues on the timing for an interest rate hike by the central bank-which some Fed officials have recently suggested could be as early as next month.
