In prepared remarks on Thursday, he reiterated that the Fed’s policy stance is data dependent, but made no significant references to the economic outlook or monetary policy.
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He did enter a get-out clause with comments that the Fed would not lose credibility if forthcoming data did not support the case for a rate hike.
Bouncing back a bit from deeper declines, the Dow Jones industrial average closed down 0.52 per cent at 17,434.99 points and the S&P 500 lost 0.37 per cent to 2,040.04. Ipsos MORI reported that 55% of the public are planning to vote to stay in Europe in June’s referendum, with just 37% backing Brexit. The intraday low almost matched it, although there has been a 4 point bounce.
As expected, the FOMC left its benchmark rate unchanged.
Dudley said he was “quite pleased” investors had apparently increased bets that a rate hike would come soon. The dollar index, which tracks the greenback against a basket of six major currencies, was up 0.1 percent in early Asian trading at 95.161 .dxy after rising as high as 95.270 overnight.
The Fed is looking more and more like it will raise its key interest rate at the regular meeting of its Open Market Committee in June, according to the minutes of the April OMC meeting, released Wednesday afternoon. The index is poised for a 0.7 percent weekly gain.
The dollar soared as high as 110.25 yen overnight, its strongest since April 28, the last time it traded above 110.
The euro has started to grind lower against the U.S. dollar over the last week moving closer towards the bottom of 1.1200 to 1.1600 trading range which has remained in place over the last couple of months. It was down about 1 percent for the week. It stood at $1.1214 to the euro., having touched its lowest in over seven weeks at $1.1180.
For potential cues the currency market awaited the G7 meeting of central bankers and finance ministers kicking off on Friday in the northern Japanese city of Sendai, although the event’s potential impact may have lessened since the yen’s bull run has ended. The meeting could expose a rift on issues ranging from currency and fiscal policies within the group of advanced economies.
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JPY GDP 0.4% vs. 0.1%. The fear-gauge CBOE Volatility Index (VIX) increased 6.1% to settle at 15.57.
