Treasury two-year yields climbed to the highest level in two months after Federal Reserve Vice Chairman Stanley Fischer became the latest official to signal interest rates may increase this year.
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Germany’s PMI reading also reassured, as a combined manufacturing and services sector survey came in comfortably above the line that separates growth from contraction. The index pared gains after rising by as much as 0.3 percent earlier in the session.
The dollar was up 0.6 percent against its Japanese counterpart at 100.79 yen, while the euro was down 0.3 percent at $1.12830, slipping from last week’s eight-week high of $1.1366. The drop in energy prices dragged down energy stocks, which lost 1.1 percent, more than the rest of the market.
ASIA’S DAY: Tokyo’s Nikkei 225 gained 0.3 percent to 16,598.19 while the Shanghai Composite Index lost 0.7 percent to 3,084.81.
She added that investors will turn their attention to a speech by Fed Chair Janet Yellen in Jackson Hole, Wyoming, later this week for the won’s next moves, although direct hints about the US Federal Reserve’s next policy move seems unlikely.
While investors do not expect the central bank to raise interest rates at its September meeting, there’s always the possibility and the increasing likelihood of a rate increase once the presidential election is finished.
The Kiwi Dollar is the currency market’s biggest mover following comments made by the Governor of the Reserve Bank of New Zealand.
“Will Yellen deliver anything this Friday?” asked Saxo Bank’s head of currency strategy in London, John Hardy.
“The market does seem to be reluctantly acknowledging the chorus of senior Fed speakers who have suggested recently that a 2016 rate hike is still quite probable and September is “live”, wrote analysts at ANZ in a note.
Also in his speech, the Fed vice chair mentioned the economic turbulence the USA had faced in the past few years including the Greek debt crisis, the Chinese growth slowdown, the decline in oil prices and Britain’s vote to leave the European Union. Expectations for a hike in September were at around 20 percent. A quarter-point hike is not fully priced in until September next year.
The currency market has fluctuated over the past week on mixed signals regarding USA monetary policy.
Brent crude was off 12 cents at $49.04 a barrel.
Biotech stocks received a boost from Pfizer’s $14 billion acquisition of cancer drug maker Medivation, which jumped almost 20 percent. It hit a two-month high of $51.22 on Friday.
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The first August U.S. PMI surveys are also due later.
