The next key indicator is Friday’s jobs report for August, which is expected to show employers added 180,000 jobs in the month, according to the median estimate of 89 economists polled by Reuters. Gold, meanwhile, slipped 0.4% to $1,321.50 an ounce.
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Turning to USA equities, the Dow Jones industrial average and S&P were down 0.5 percent and 0.4 percent respectively, while the dollar gained 0.6 percent to $1.1135 against the euro. Earlier on Wednesday, the ANZ bank’s survey for August showed a net 15.5 percent of companies were optimistic about the coming year, which was fractionally lower than July. But both Fed Chair Janet Yellen and Vice Chair Stanley Fischer suggested on Friday the case for a rate increase was strengthening, and Fischer is due to speak later on Tuesday.
Federal Reserve Chair Janet Yellen in her speech at the annual Jackson Hole conclave last week hinted at a second interest rate hike sooner rather than later against the backdrop of continued solid performance of the U.S. labour market and economic activity.
Expectations of USA interest rates remaining lower for longer have helped underpin a rally in riskier assets in recent months in everything from global stocks to emerging-market bonds.
The signs of weakness in the economy and the uncertain outlook for USA monetary policy led sterling to slip back towards $1.30.
“We would expect stock markets to look to make gains, particularly as some of the drags on [company] earnings start to fade”, said John Stopford, head of multiasset income at Investec Asset Management. In early trade, the U.S. dollar index was up 0.27 per cent at a fresh two-week high of 95.76 against a basket of six major currencies. Traders are also squaring positions ahead of Friday’s U.S. Non-Farm Payrolls report.
Gold is highly-sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced. Higher interest rates tend to encourage investors to move out of non-yield-bearing assets like precious metals.
The dollar index eased 0.1 percent on Wednesday.
The yield on Italy’s 10-year BTP bond rose 1.5 basis points to 1.13 per cent before its planned sale of up to €7.75-billion of three bonds later.
The prospect of the yen resuming its advance to 100 per dollar ― a threshold last breached on August 23 ― is “likely to be limited ahead of the United States jobs data”, Masafumi Yamamoto, chief currency strategist at Mizuho Securities Co in Tokyo, said in a note.
In China, the Shanghai Composite Index fell 0.24% and Hong Kong’s Hang Seng Index was trading flat.
Europe’s STOXX 600 Oil & Gas index fell 0.6 percent, one of the biggest sectoral decliners, weighed down by falls in crude oil prices.
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Silver rose 1 per cent to $18.77 an ounce.
