“Fischer’s comments this morning made me raise my odds for a September rate hike”, Marty McGuire, a managing director-market strategy at TJM Investments in Chicago, said by telephone.
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The dollar index.DXY, which measures the greenback against a basket of six major rivals, strengthened to a almost three-week high of 96.064 as investors looked ahead to Friday’s jobs data.
The Aussie was set to lose 1 percent versus the dollar this month, although it had risen to a near four-month high of $0.7760 early in August with Australia’s relatively higher yields a draw for investors escaping negative rates in the euro zone and Japan.
S&P 500 financials closed at their highest level since early December, right before the Fed raised interest rates for the first time in almost 10 years.
In an interview on Tuesday, Vice Chair Stanley Fischer had said the USA jobs market is almost at full strength and that the pace of rate increases by the Fed will depend on how well the economy is doing.
His comments came after Fed Chair Janet Yellen painted a rosy picture of the U.S. economy at an economic symposium on Friday and said the case for a rate hike was strengthening.
“A December hike remains very likely, although a bumper payrolls on Friday would make September more live”, said Peter Jolly, the global head of markets research at National Australia Bank Ltd.in Sydney.
A reading of the US consumer confidence index came in at 101.1 for August, up from a revised 96.7 in July. The prospect of a Fed interest rate hike in the coming months has been a source of strength for the greenback in recent days. The S&P 500 financial sector .SPSY is up 1.8 percent so far this week, compared with a 0.3 percent advance for the S&P. His statement gave new support to a U.S. dollar which rose to a three-week high , putting pressure on gold prices and oil futures. It has found solid chart support around $0.7530 but a break there could see it touch $0.7450, a level last visited on July 27.
The Dow Jones industrial average .DJI was last down 65.3 points, or 0.35 percent, at 18,437.69. Platinum was up 0.7 per cent at $1,058.90.
Oil prices fell for a second straight day in response to the dollar’s strength, but the downside was limited by production suspensions in the US Gulf, due to an expected tropical storm.
About 5.66 billion shares changed hands on USA exchanges, compared with the 5.98 billion daily average over the last 20 sessions.
Sterling hit a three-decade low of $1.2798 in July in the wake of the vote for Brexit.
Gold has been losing momentum since the start of August, right around the time that options traders and hedge funds started to scale back bullish bets on the yellow metal. December silver contracts were trading down 0.3% at $18.62 a troy ounce through Wednesday’s overnight session.
Brent crude futures settled down 89 cents, or 1.8 percent, at $48.37 per barrel.
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In what could be one of the most unusual statements to come from Washington this year, Federal Reserve Vice Chairman Stanley Fischer gave his approval to the concept of negative rates, insisting that this approach to economic policy appears to be working around the world.
