The greenback initially gained on hawkish comments from New York Fed President William Dudley and Atlanta Fed President Dennis Lockhart, but dollar bulls were disappointed after the July Fed policy meeting minutes suggested the central bank was not in a hurry to increase rates. South Korea’s Kospi dipped 0.1 percent to 2,053.97 and Hong Kong’s Hang Seng shed 0.3 percent to 22,966.21 while the Shanghai Composite Index retreated 0.2 percent to 3,098.01.
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Comments in favour of a hike soon from San Francisco Federal Reserve Bank President John Williams and his NY counterpart William Dudley offered the dollar some support.
The Australian dollar slid 0.8 per cent to US76.27¢.
The pound was down 0.1 percent at $1.3055 GBP=D4 after being knocked away from a 2-week high of $1.3186 on Friday. The remarks left the odds of a Fed hike this year at little better than a coin toss, signaling traders remain skeptical that United States policy will diverge further in coming months from Japan and Europe, where central banks are adding stimulus.
“I expect GDP growth to pick up in the coming quarters, as investment recovers from a surprisingly weak patch and the drag from past dollar appreciation diminishes”, he said, without providing a specific rate forecast.
Williams does not have a vote on Fed policy this year, but his views are seen as influential on the policy-setting committee because of his close and longstanding relationship with Fed Chair Janet Yellen, his former boss at the San Francisco Fed, and his research-driven style.
The dollar was up 0.4 percent at 100.610 yen JPY=, pulling further away from an 8-week low of 99.550 struck early last week.
“There is a bit of uncertainty over the Fed’s decision and Yellen’s speech next week is motivating investors to take some money off the table”, said Peter Cardillo, chief market economist at First Standard Financial in NY.
“A 1.25 percentage point slowdown in productivity growth is a massive change, one that, if it were to persist, would have wide-ranging consequences for employment, wage growth, and economic policy more broadly”.
The U.S. two-year note yield, among the maturities most sensitive to the outlook for Fed policy, rose four basis points, or 0.04 percentage point, to 0.75 percent as of 2:18 p.m.in NY, according to Bloomberg Bond Trader data.
The euro was down 0.3 percent at $1.1289 EUR= , adding distance between $1.1366, its highest since June 24 reached on Thursday. It was on track to gain 1.6 percent for the week.
Oil prices have surged this week on expectations of revived talks by key exporters to freeze output levels. Brent crude, used to price global oils, lost 34 cents to $50.55 a barrel in London after jumping 2 percent the day before.
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US crude CLc1 , which rose as much as 3.4 percent on Thursday, set a fresh six-week high of $48.65. It was last up 0.7 percent at $48.61 a barrel.
