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Dollar rises after Yellen comments on rates
Fed watchers had complained this year that U.S. central bankers’ public pronouncements had been inscrutable and sometimes contradictory, leaving investors perplexed.
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In a meeting, members of the groups Fed Up and the Center for Popular Democracy told Fed policymakers that the assessment that the USA was approaching full employment did not reflect life for many blacks and Latinos looking for work.
San Franciso: Wall Street will fixate on a wave of U.S. economic data next week, crested by payrolls data on Friday that could sway expectations about the timing of future interest rate hikes and spark volatility in record-high stock prices.
San Francisco Fed chief John Williams was largely sympathetic but said delaying rate hikes could lead to a recession in later years. In afternoon trading, the dollar was up 0.74 percent at $95.47 versus a basket of major currencies .DXY .
The Dow Jones slipped by 53.01 points, or 0.3 percent to conclude trading at 18,396.4 points, while the S&P 500 similarly slipped by 3.43 points or 0.2 percent to end trading at 2,169.04 points.
Brent crude futures was trading at $49.58 a barrel.
As Yellen put it, “The case for an increase in the federal-funds rate has strengthened in recent months”.
UK’s benchmark FTSE 100 closed up 1 percent, the pan-European FTSEurofirst 300 ended the day up by 0.6 percent, Germany’s DAX ended up by 0.6 percent, France’s CAC finished the day up by 0.9 percent.
Yellen told the gathering of central bankers from around the world the USA economy was nearing the central bank’s goals of maximum employment and price stability but she maintained that future hikes should be “gradual”.
Meanwhile, the Fed’s Deputy Governor, Stanley Fischer has suggested that a decision could be made at the next meeting in September – should the economic parameters continue to improve. Investors see chances of a September hike at 36 per cent, up from 21 per cent. Traders are now pricing in a 60.2% likelihood of a hike in December, up from 51.8% Thursday. The Australian dollar initially rose 0.18 percent to $0.7690. In contrast, sectors likely to be hurt by higher rates, such as utilities and telecoms, fell.
“Taken in balance the market has found a new direction today; it’s just with those comments coming so close together we got bounced around a little bit here”. It was last up 7.3% at 14.63.
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Declining issues outnumbered advancing ones on the NYSE by a 1.85-to-1 ratio; on Nasdaq, a 1.49-to-1 ratio favoured decliners.