Federal Reserve officials have sought in recent weeks to revive the expectation of an interest rate hike this year, after repeated delays in response to slowdowns in China and Europe. Ms. Yellen also will consider the political side, as the stock markets are quite vulnerable now.
Advertisement
After rallying last weeon speculation of a rate hike this month, the data out of Washington has doused any of those hopes, analysts said, while a rise this year could now be in question.
“That said, the BOJ could still make a splash by pulling out some unconventional policy measure, but pressure is certainly mounting for some kind of action”, Innes added.
Either a deferral or a 25 basis point hike soon would be “good for gold”, according to RBC Capital Markets. In Hong Kong, the Hang Seng index was flat.
The Institute for Supply Management’s index of non-manufacturing activity fell to 51.4, its lowest level since February 2010, from 55.5 the month before and well shy of the 55 estimate. The Markit Services PMI for the United Kingdom in August came in at 52.9, from a seven-year low of 47.4 in July.
The Fed could raise its 2 percent inflation target to 3 percent or even 4 percent, or shift away from inflation targeting altogether and instead target a nominal level of national economic output, Williams said.
Investors will wait until they get more clarity on presidential elections, the quality of third-quarter earnings and the timing of the next rate hike, Courtney said.
The greenback declined 0.5% at 101.45 yen after declining as low as 101.20 before, its lowest since August 26.
After moving around ¥102 in early Tokyo trading, the dollar plunged to around ¥101.20.
A top Federal Reserve official on Tuesday repeated his call for gradual interest rate hikes, evidently unfazed by a slowdown in US job gains and sluggishness in the services sector that now has traders betting against any rate hike at all this year. Analysts parsing the RBA statement noted that the central bank appeared to be signaling concerns that further rate cuts might overheat the housing market.
The Australian dollar took a breather.
In Japan, internet company Rakuten’s shares rose 6.83 percent after the announcement it would be included in the Nikkei Average, Reuters reported. The troubled container shipper saw shares gain 10.07 percent, extending Tuesday’s 29.91 percent surge.
Brent crude futures stood at US$47.24 per barrel, little changed on the day but up slightly so far this week and above its low last week of US$45.32. Investors also awaited Thursday’s European Central Bank meeting, with most economists predicting President Mario Draghi will lengthen quantitative easing for a second time and leave interest rates unchanged. The Stoxx 600 index fell 0.2 percent led lower by banks, for whom rock-bottom interest rates promise tough times.
Advertisement
“We see more potential upside from here with September now looking highly unlikely for rates to move higher”.
