U.S. Federal Reserve policy makers last month believed risks to the United States economy had lessened but wanted to keep their interest rate policy “options open”, according to minutes released August 17, 2016.
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“Nevertheless, with inflation continuing to miss to the downside, the case for caution remains strong”. The dollar was down 0.79 percent against the franc at 0.9538 franc and was down 0.29 percent against the yen at 99.95 yen.
The minutes were released a day after the New York Fed President William Dudley said “it’s possible” that rates may rise at the policy meeting at the end of September.
Bullion for immediate delivery advanced as much as 0.6% to $1 356.18 an ounce and traded at $1 352.61 at 3:04pm in Singapore, according to Bloomberg generic pricing.
“The Federal Open Market Committee minutes disappointed those looking for a more explicit hawkish signal”.
The dollar dropped Thursday as records from the Federal Reserve’s last meeting dampened hopes of an imminent United States interest rate hike.
“We are edging closer towards the point in time when it will be appropriate to raise rates further”, he said. Jobs data for July were strong – payrolls rose 255,000 – but retail sales and inflation indicators for the month were soft, leaving open the possibility of a prolonged Fed divide that could further delay the next rate move.
The upbeat mood extended into most European markets with Russian dollar-denominated stocks up 1.2 percent, Turkish stocks up 0.8 percent and Prague shares up 0.3 percent.
The yen edged up 0.2 percent to 100.10 per dollar, rising as high as 99.645 at one point, nearing a seven-week peak of 99.55 to the dollar set on Tuesday.
The U.S. two-year note yield, among the maturities most sensitive to the outlook for Fed policy, rose four basis points, or 0.04 percentage point, to 0.75 percent on Friday.
A rise in rates would increase the opportunity cost of holding non-yielding commodities like bullion, which don’t offer interest or dividend like other securities.
The weaker dollar was an additional help to commodities, but crude prices were slightly depressed by the prospect of record Saudi output.
Currency markets are more concerned that the USA economic growth is weakening after recent economic data releases painted a weak outlook.
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Benchmark copper on the London Metal Exchange extended gains to be up 0.7 percent at $4,806 a tonne after losing 0.8 percent on Wednesday.
