Traders are awaiting a speech by Fed chief Janet Yellen at the Jackson Hole symposium of global bankers Friday hoping for clues about the direction of USA monetary policy. Spot gold was up 0.1 percent at $1,324.11 an ounce at 1131 GMT, while USA gold futures for December delivery were down $2.60 an ounce at $1,327.10.
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ASIA’S DAY: Japan’s Nikkei 225 index fell 0.3 per cent to 16,555.95, while the Shanghai Composite index lost 0.6 per cent to 3,068.33.
David Jones, chief economist at DMJ Advisors, agreed that the chances of a September rate hike are rising, especially if forthcoming economic data, including next week’s jobs report for August, show strength.
Recent hawkish comments from Fed Vice Chairman Stanley Fischer and New York Fed President William Dudley have raised some investors’ expectations that Yellen might also take a less cautious tone.
The chances of a September rate hike now sit at 21%, according to CME Group fed funds futures. It hit a record high of 5,272.51.
Financials, which stand to gain the most in a higher-rate environment, rose 0.11 per cent.
All 10 major S&P 500 indexes were higher.
The financial index rose 0.47 percent. Mylan dropped $2.47, or 5.5 percent, to $43.15 after falling almost 5 percent the day before.
Garmin was the top percentage loser on the S&P, falling 4 percent after Goldman Sachs downgraded the stock.
J.M. Smucker dropped 8.1 per cent after its quarterly revenue missed estimates. The contract is trading around a one-month low, with psychological support at $1,300 per ounce. October Brent crude fell 1.8% to $49.05 a barrel on London’s ICE Futures exchange on Wednesday.
Recent hawkish statements by Fed officials including Vice Chairman Stanley Fischer and New York Fed President William Dudley have prompted some investors to raise bets that USA interest rates will rise sooner rather than later, and some believe Yellen will echo their signals.
The dollar eased against a basket of currencies as some investors sold the currency before the annual global central bankers’ gathering in Jackson Hole, Wyoming, where Yellen was to speak on U.S. monetary policy.
“I do think it is time to move that rate”, Kansas City Fed President and voting member, Esther George, told CNBC, while Dallas Fed President Robert Kaplan said the central bank was “moving toward being able to take another step”.
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Some economists say they think conditions are ripe for Yellen to alert investors that the central bank may be inclined to act at its next policy meeting, September 20-21 – especially in light of recent remarks from other Fed officials.
