Gold futures were trading little changed Wednesday after logging their highest settlement in almost three weeks a day earlier as investors pared expectations for how aggressively the Federal Reserve would move to increase interest rates.
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The S&P 500 posted 37 new 52-week highs and no new lows; the Nasdaq Composite recorded 168 new highs and 20 new lows.
Coming after data last week showed a surprise contraction in manufacturing, the latest report led traders to roll back bets on a hike this month just as a slew of Fed officials are set to sound off.
Silver also rose in a choppy fashion to session highs.
In his prepared remarks Williams did not address the release of data on Tuesday that showed activity in the USA services sector had hit a six-and-a-half-year low, or government data last Friday that showed US employers added fewer jobs than expected in August.
Tal has been forecasting a December rate change for months.
But is it the late after effect of the United Kingdom referendum, or weakness in the USA economy that is here to persist, that we don’t know yet but these figures have posed considerable doubts over the possibility of a rate hike in September. “If the data continues to soften heading into the FOMC meeting, expectations will be pared back and Treasuries will continue to rally”. The monthly non-manufacturing purchasing manager’s index on the service sector came in at 51.4 for August.
Meanwhile, the single currency weakened as investors eyed the European Central Bank’s upcoming meeting on Thursday, amid speculation over potential easing measures to boost growth. Trump hinted a few months ago that if elected, he will replace Fed Chair Janet Yellen, though he likely would not do it before her term runs out in 2018. That’s being reflected in a falling US dollar, he said. In a world where an increasing number of government bonds yield less than zero, high-yielding currencies have become attractive alternatives.
The Australian dollar AUD= jumped 1.3 percent against the greenback, bolstered in part by the Reserve Bank of Australia’s decision to leave interest rates unchanged at 1.5 percent. Nevertheless, gains are modest following the release of Australia’s second-quarter GDP data.
He also warned in his speech that the “new normal” of low interest rates may make the central bank´s job harder.
After moving around ¥102 in early Tokyo trading, the dollar plunged to around ¥101.20. Rates on two-year notes, which tend to be more sensitive to the monetary policy outlook, dropped six basis points to 0.73%. Emerging markets have been cautious as a Fed rate hike could mean a stronger dollar which, in turn, could weaken their currencies – a repeat of the events that unfolded after the Fed chose to roll back its bond-buying program in December 2013.
In data, the US JOLTS job openings will be due later today. The Japanese Yen reversed its previous losing streak as investors were disappointed by Bank of Japan.
“Without the Fed around to support the heavy lifting in September, that is to raise rates, the market is less than convinced that any standard Bank of Japan policy will be effective at this stage”.
Declining US yields undermined the dollar against other currencies and precious metals.
On the Shanghai Futures Exchange, gold for December delivery dropped 0.3 per cent to 290.10 yuan a gram, while silver lost 0.2 per cent to 4,406 yuan a kilogram. Between June and August, job gains averaged 232,000 per month.
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In the commodities segment, gold was down by 1.17 per cent while the West Texas Intermediary crude contract closed 1.56 per cent lower. Weekly jobless claims in the USA follow later in the day. There were multiple factors in play other than the reaction of the Federal Reserve and swings in the oil prices. Alexander Novak, the Russian energy minister, and Khalid al-Falih, his counterpart in Saudi Arabia, spoke together of freezing the production of oil as one of preferred possibilities. The Japanese market is lower on a stronger yen.
