ASIA’S DAY: Japan’s Nikkei 225 added 0.7 percent to finish at 17,037.63. However, the Exhibit below illustrates that rate expectations adjusted less than Dollars, which makes sense, given that the Fed’s current strong rhetoric is nearly providing calendar guidance towards higher rates. The Institute for Supply Management’s non-manufacturing index slumped to 51.4, the lowest since February 2010, from 55.5 in July, a report from the Tempe, Arizona-based group showed Tuesday.
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“This weak data further reduce the possibility of an interest rates hike soon by the Federal Reserve”, he added. But most investors didn’t expect rates to rise this month, and the jobs report appeared to confirm that. “Since the Jackson Hole speech, the implied probability of Fed’s rate hike for its September meeting fell from 42 percent to 24 percent and the 2-year Treasury yield dipped by around 10 basis points”, said Petr Krpata, currency strategist at ING. Similar to last autumn when the Fed prepared markets for a rate hike, even when the economy was weakening, it seems to be going ahead with its rate hike plans.
US interest rate futures price 0#FF: gained to indicate only about a 15 percent chance of a rate hike this month and just over 50 percent by December, compared to above 20 and 60 percent, respectively, before the data. South Korea’s Kospi gained almost 1.0 percent in early trading to 2,057.77. The Shanghai Composite index lost 0.4 percent to 3,060.83 and Australia’s S&P/ASX 200 fell 0.2 percent, to 5,348.28.
CURRENCIES: The dollar rose to 103.89 yen from 103.31 yen and the euro edged down to $1.1160 from $1.1202.
Gold for December delivery on the Comex division of the New York Mercantile Exchange rose 0.11 to $1,351.05 a troy ounce.
Gold XAU= rallied to $1,352.4 per ounce to near three-week highs on Tuesday, and last stood at $1,350.0.
USD/JPY slipped 0.10% to 103.33, while USD/CHF was little changed at 0.9801.
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Oil prices kept some distance from three-week lows touched last week, maintaining some of the gains made after Saudi Arabia and Russian Federation agreed on Monday to cooperate in world oil markets, saying they will not act immediately but could limit output in the future. Brent crude, the benchmark for global oil prices, rose 3 cents to $46.86 a barrel.
