Fed Vice Chairman Stanley Fischer, in an interview with Bloomberg TV on Tuesday, said the U.S. job market is close to full strength and the pace of interest rate hikes will depend on how well the economy is doing.
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MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS extended losses to 1 percent.
The greenback gained 1.1 percent against the yen to 103.01 JPY=, after earlier hitting 103.13, the highest level since July 29.
Frankfurt, Hong Kong and Paris all lost 0.4%.
In widely watched remarks made at the Kansas City Fed’s annual symposium in Jackson Hole, Wyo. on Friday, Federal Reserve Chairwoman Janet Yellen said the case for raising interest rates had strengthened in recent months.
US one-hundred dollar bills are seen in this photo illustration at a bank in Seoul August 2, 2013.
Our expectation is that the hawkish message from Fed Chair Yellen last week will pave the way for a September hike, which should help the Dollars recover some ground.
Most investors do not expect further policy measures when the ECB’s rate-setting Governing Council meets next week, though Westpac’s Franulovich noted that the recent string of weak data has increased speculation that a further easing could be possible. Non-farm payrolls data due on Friday is seen as a key measure of the strength of the US labour market, and could reinforce hawkish messages from Yellen and other Fed officials.
“The market’s getting more comfortable with the idea that the Fed is going to raise rates this year”, said Chris Zacarelli, chief investment officer at Cornerstone Financial Partners.
“Given the proximity of the granddaddy of all Fed data, the non-farm payrolls, it is without question that this week’s print will take on more importance than usual”, Innes said in a commentary.
The comments from Yellen and Fischer dragged Wall Street lower at the close. It held steady at 95.518 on Monday.
On Friday, comments from Yellen discussing the potential for future asset purchases were interpreted as very dovish by the market, sending the S&P 500 roaring higher.
After hovering near 100 against yen, the dollar rose to 102.4 on Monday, breaking a technical downtrend.
Japanese household spending and retail sales data for July are due on Tuesday.
Though the chances of it happening in next month’s policy meeting are still low, an end-of-the-year hike seems likely.
The Australian dollar traded flat at $0.7522, within distance of a one-month trough of $.07490 probed on August 30.
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US Treasury yields maturing between two to 10 years dipped on foreign demand after touching their highest levels since June on Friday.
