New York Fed President William Dudley and Atlanta Fed President Dennis Lockhart have also in recent days made the case that the US economy is in good shape and that the Fed should soon restart an expected run of gradual rate hikes that it began last December but shelved amid financial market turmoil and fears of the effects of a slowdown in China and Europe.
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The Fed is close to hitting its targets for full employment and 2 per cent inflation, the Fed’s No. 2 policymaker Stanley Fischer had said on Sunday. However, Fischer didn’t talk about his views on rates.
Amid conflicting signals from the Fed in recent days, central bankers from around the world will gather from August 25 for an annual meeting in the mountains of Jackson Hole, Wyoming, with Chair Janet Yellen due to speak the following day. 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.
“A dollar-buying trend will not emerge until US interest rates rise consistently on the back of a robust economy”, Jun Kato, a senior fund manager at Shinkin Asset Management, told Bloomberg News.
The yen and the Australian dollar were also weaker, with the dollar up to ¥100.87 from ¥100.22 and the Aussie down to US$0.7587 from US$0.7628.
Futures gained on Thursday, a day after the July Fed minutes were released showing policy makers are divided on rates, only to swing to a loss Friday.
The greenback rose against most major counterparts Friday, buoyed by San Francisco Fed president John Williams’s comment that September is “in play”.
Interest rate futures contracts indicate that the market is pricing in about 50/50 odds of a USA rate increase by the end of the year.
At the same time, Mr. Fischer sounded upbeat about the short-term prospects for the US economy, noting that employment growth has been solid and inflation, while below the Fed’s 2% target, is within “hailing distance”.
“It would be quite an event if Fischer went out so close to Yellen’s speech” and said something she disagreed with, former Fed board economist Roberto Perli told the Bloomberg news agency.
Oil headed for its strongest weekly increase in four months after entering a bull market amid speculation that major producers may act to freeze output at the same time US crude and fuel stockpiles decline.
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Crude futures have risen nearly $10 a barrel since early August on speculation that Saudi Arabia and other members of the OPEC will agree next month to a production freeze deal with non-OPEC producers led by Russian Federation. Brent crude was 0.9 per cent lower at US$50.43 a barrel, after gaining 8 per cent last week, rising for a third week in a row. It was on track to gain 1.6 percent for the week.
