Dollar bounces on hawkish comments from Fed’s Lockhart, Dudley * Fed’s July meeting minutes eyed for more direction * Pound awaits United Kingdom employment data after rising overnight (New throughout after the start of European trade) By Patrick Graham LONDON, Aug 17 (Reuters) – The dollar extended its recovery against a basket of currencies on Wednesday after bouncing back from 7-week lows against the yen and euro on the back of hawkish comments from a pair of Federal Reserve officials in the previous session.
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USA stocks are trading lower Wednesday as the market inches away from its recent record highs. The stock was the top percentage gainer among S&P 500 components.
The yields on the 10-year Treasury note rose two basis points, or 0.02 percentage point, to 1.57 percent, while those for two-year notes increased to 0.75 percent.
“What you are seeing is volatility on speculation about when the U.S. Fed will raise rates and that has been the main driver (of gold prices)”, Simona Gambarini, an analyst at Capital Economics said. Yields on two-year US notes, the coupon maturity most sensitive to policy expectations, climbed as the dollar trimmed a drop of as much as 1.2 percent.
The Dow Jones industrial average traded about 50 points lower, with McDonald’s and Home Depot contributing the most losses.
Shares in the US pulled back on Tuesday, rattled by uninspiring inflation report and a lack of growth in corporate earnings.
The Stoxx Europe 600 index dropped 0.8 percent as a stronger euro weighed on exporters.
“The dollar is getting support from Dudley’s general reference to the market being too complacent about Fed hikes between now and end-2017″, said Gareth Berry, a foreign-exchange and rates strategist in Singapore at Macquarie Bank Ltd”.
Lowe’s Cos, Staples and Target are slated to report earnings before the opening bell.
S&P 500 e-minis were up 0.25 points, or 0.01 percent, with 131,451 contracts traded. Investors will look to the release on Wednesday of minutes from the Federal Open Market Committee’s July meeting for further insight into officials’ latest thinking. In Asia, stocks closed mixed, with the Nikkei 225 rising 0.9 percent and the Shanghai composite ending marginally lower.
On the oil front, US crude erased losses, trading about 0.4 percent higher at $46.73 a barrel, after Energy Information Administration data showed oil inventories decreased by 2.5 million barrels last week.
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Cisco fell 1.6 per cent to $30.62 after technology news site CRN reported the company is laying off about 14,000 employees or 20 per cent of its global workforce. Phone and utilities shares led declines, falling at least 1.2 percent.
