A voting member of the Federal Reserve’s policy committee said Friday that he believes the economy is on a satisfactory track and that an increase in interest rates is likely to be appropriate in either October or December.
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Dealer respondents also assigned the greatest chance to 10-year Treasury yields sitting between 2% and 3% by year-end, with 44% predicting yields of 2.01% to 2.5%.
Spurring the losses, minutes from the Fed’s latest meeting showed policy makers discussing the damping effect of dollar strength on inflation and exports, while repeating their intention to lift the overnight target.
The dollar has dropped to a 3-week low of USD1.1365 against the Euro Friday afternoon, from around USD1.1280 this morning.
Finally, the dollar was 0.64% lower against its Canadian counterpart changing hands at CAD$1.2933, having breached the USD/CAD 1.30 level in early U.S. trading. It was noted that monetary policy was better positioned to respond effectively to unanticipated upside inflation surprises than to persistent below-objective inflation, particularly when the federal funds rate was still near its effective lower bound.
European shares rose to a one-month high on Friday after making their biggest weekly gain since January as mining stocks gained and hopes grew that interest rates would stay low for longer.
While private investment demand for gold may be just beginning to react to worsening tensions on the geo-political front, Americas former red rivals, Russian Federation and China, each acting independently, have been quietly buying and building their official central-bank gold reserves, each with annual purchases often in the one-hundred to two-hundred ton range, and a few years higher.
September’s job report was disappointing, but Lockhart notes “the consumer-based dimension of the economy has been robust for several months”. The market’s view on the probability of a rate hike from the October 27 to 28 FOMC meeting was five percent after the minutes were released Thursday, compared with 38 percent for a December 16 hike, according to CME Group data.
Dudley said “it’s possible” that the Fed could begin hiking later this month, though he questioned whether data between now and then would give it confidence.
However, over the long term, rates are expected to rise and gold prices could potentially slide down to $1,000 or below. Tokyo eased 0.50 percent, Hong Kong lost 0.75 percent and Seoul dipped 0.10 percent.
Meanwhile, USD/CAD declined 0.62% to trade at 1.2936.
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ASIA’S DAY: Japan’s Nikkei 225 added 1.6 percent to 18,438.67 and Hong Kong’s Hang Seng climbed 0.5 percent to 22,458.80. Republication or redistribution of content provided by EconoTimes is expressly prohibited without the prior written consent of EconoTimes, except for personal and non-commercial use.
