The Australian dollar edged up 0.25 per cent to an nearly two-week high of $0.7641 after Reserve Bank of Australia Governor Philip Lowe said interest rate cuts and a weaker currency are helping the economy, and that it was “not particularly useful” to keep cutting rates in the hope that it will eventually lift growth. Energy and metals prices are rising as the dollar gets a bit weaker. Many Fed-watchers had expected no rate increases until November. The S&P 500 Index gained 1.1 percent to 2,163.12, the most on a Fed day since December, when it raised rates for the first time in a decade and the market ended 1.5 percent higher.
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Analysts expressed doubt, though, that the Bank of Japan’s new target would change the mindset of shoppers and businesses long used to a stagnant economy and flat or declining prices. Those steps could have weakened the yen.
CURRENCY: The dollar edged up to 100.64 yen from Wednesday’s 100.30 yen.
Energy shares were also in demand after oil prices also rose on a weaker dollar, extending gains from the previous session when a surprise third consecutive weekly United States crude inventory draw tightened supply. West Texas Intermediate crude gained 2.2% to $46.37 per barrel and Brent rose 1.8% to $47.69 per barrel. Murphy Oil jumped 4 percent. July’s sales were also revised lower to 5.38 million units from a previously reported 5.39 million. Its stock climbed $7.23, or 7.2 percent, to $107.85. The December meeting will include the summary of economic projections and a press conference by Fed Chair Yellen.
The uncertainty swirling around the Fed isn’t just about when it will next raise its benchmark interest rate. It touched a six-week high of 96.333 on Wednesday, before ending the day down 0.4 per cent from its previous close. Homebuilders had slumped Tuesday after the USA government said construction of new homes slowed down in August. That was down from its March estimate that the rate would be at 3 percent after 2018.
The Stoxx Europe 600 rose 1.6% following gains in Asia. He also said the jobless claims number may be constructive for stocks on the stock market. On the Nasdaq, 1,804 issues rose and 429 fell.
Domestic indices have taken a roller coaster ride in recent weeks, in part based on some speculation that the Fed would raise the federal funds rate at this month’s policy meeting.
US financial markets are modestly higher as investors await the Fed’s statement and Chair Janet Yellen’s 2:30 p.m. press conference.
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BONDS, CURRENCIES: Bond prices fell. Inflation has remained below that level for more than three years. The euro dipped to $1.1144 from $1.1157. Tokyo’s Nikkei 225 reversed an early loss and closed 1.9 percent higher.
