Despite the recent volatility in most markets a quieter session may be ahead today as traders wait patiently for Thursday’s release of USA retail data.
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Japan’s Nikkei .N225 was up 0.3 percent.
Comments from Fed officials in recent days is likely to remain a key driver for trading in today’s session given the lack of economic data or events.
The FOMC meeting convenes in Washington on Sept 20 and concludes on Sept 21 when it will issue a monetary policy statement and updated forecasts from FOMC members on the direction of the economy and interest rates. Subsequently, the CME Group FedWatch tool put the odds of a September rate increase at just 15 percent, down from 24 percent earlier in the day.
USA interest rate futures prices rose on Monday, diminishing the implied probability of a rate hike by the United States central bank next week, after Federal Reserve Governor Lael Brainard warned against a rush to raise interest rates.
US markets responded positively to Brainard’s comments, with the S&P 500 index rallying almost 1.5 percent on Monday, its best day since early July.
The panel last raised rates in December.
The dollar, which had fallen against the yen before Brainard’s remarks partly on speculation that the Bank of Japan was studying several options to steepen the bond yield curve, briefly extended its loss on the day to more than 1 percent. Until the recent comments, investors had been expecting the Fed to delay a rate increase until December or later.
The dollar index, which measures the greenback against a basket of six major currencies, rose 0.2 percent. The Standard & Poor’s 500 index rose 31.23 points, or 1.5 percent, to 2,159.04.
In a speech earlier Monday, Dennis Lockhart, president of the Fed’s regional bank in Atlanta, said he still held the view he expressed last month at a Fed gathering at Jackson Hole, Wyoming, that economic conditions justified consideration of a rate hike in September.
Oil prices were down more than 1 percent after a report from the International Energy Agency added to concerns about global oversupply. The euro dipped 0.1 percent to US$1.1220 while the yen was all but flat at 101.90 per dollar. Throw in an aversion to disrupting markets before an unusual US presidential election, and a rate increase next week, while not out of the question, seems unlikely.
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Oil prices drifted lower after closing almost 1 percent higher on Monday, buoyed by a softer dollar and hopes for a deal between Saudi Arabia and Russian Federation on stabilizing crude output at this month’s OPEC meeting. Three-month copper on the London Metal Exchange edged up 0.1% to $4,650.50 a tonne after plumbing $4,582 a tonne on Monday, the weakest since June 20.
