According to Taylor, the Fed’s messaging means that there should be an increase in mortgage refinancing this fall as borrowers prepare for higher rates in 2017, but Taylor cautions that rates have been historically low for so long that most people who want to refinance have already done so.
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European stocks are seen opening slightly lower on Wednesday as investors ponder when the Federal Reserve might hike US interest rates again. A report on private payrolls showed companies added workers to US payrolls this month in line with projections, adding to signs of a steady labor market. This is a good preliminary to Friday’s non-farm payrolls data released by the U.S. Labor Statistics Board.
On Wall Street on Tuesday, markets logged losses, dragged down by shares of Apple Inc after antitrust regulators ordered the company to pay about US$14.5 billion in back taxes.
Spot gold prices hit a six-week low of $1,311.65 on the strength in the dollar.
USD/CAD is supported at 1.2970 levels and is trading at 1.3099 levels. It touched its lowest since June 24 at $1,304.91 an ounce on Wednesday.
NEW YORK, Aug 31 (Reuters) – The U.S. dollar fell from three-week highs against a basket of currencies on Wednesday after weak manufacturing data dented some optimism about U.S. economic growth ahead of a highly anticipated jobs report on Friday.
“Based on this economic outlook, the FOMC continues to anticipate that gradual increases in the federal funds rate will be appropriate over time to achieve and sustain employment and inflation near our statutory objectives”.
Europe’s broad FTSEurofirst 300 index closed up 0.50 percent, at 1,357.17.
Nasdaq 100 e-minis were down 8.5 points, or 0.18 percent, on volume of 18,989 contracts.
Supporting the case for higher rates was a report that showed consumer spending, which accounts for more than two-thirds of US economic activity, rose for the fourth straight month in July.
Despite hawkish comments last week from both Fed Chair Janet Yellen and Vice Chair Stanley Fischer, markets still price in less than 50 percent chance of a rate rise in September.
An upbeat payrolls report would support the view that further United States rate hikes may be on the cards, after Fed officials sounded a hawkish note at a meeting last weekend. The Aussie has been on a downtrend since hitting a near 3-1/2 month high of $0.7760 earlier in August.
A hike would also bolster the United States dollar, which the yellow metal is denominated in.
Some doubts as to whether the U.S. central bank will be able to move next month helped European shares gain.
Two-year yields, which are more sensitive to near-term rate hike expectations, were also up 1 basis point at 0.81 percent. They fell 1.27 per cent to 943.23 tonnes on Wednesday and were down 1.6 per cent for the month.
The unemployment rate has hovered near 5% for the past year, he noted last week.
The US nonfarm payrolls report later Friday will be important in determining whether the Fed will raise borrowing costs as soon as this month. U.S. gold futures for December delivery settled down 0.8 percent at $1,316.5 per ounce. U.S. gold futures fell $2 to $1,309.40. U.S. crude was down 39 cents, or 0.83 per cent, at $46.59 per barrel.
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Brent crude settled down 66 cents, or 1.32 percent, at $49.26 a barrel.
