The US dollar trimmed some of its early losses against its key counterparts in early New York trading on Tuesday, as Federal Reserve Bank of New York President William Dudley indicated that the economy has evolved in a good shape that could justify rate hike as early as next month. The pound has been falling steadily since the Bank of England launched a new round of monetary easing 10 days ago.
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“Dudley definitely had an impact on the market”, said Justin Lederer, an interest-rate strategist at Cantor Fitzgerald LP, one of the 23 primary dealers that trade with the Fed. However, Dudley thinks these estimates are “too low” and that “the market is complacent about the need for gradually snugging up short-term interest rates over the next year or so”.
The dollar index was down 0.1 percent at 95.61.DXY after dropping to its lowest since August 3 last Friday.
“As it stands now, market participants see a less than 50-50 chance of rates rising by December”.
The Fed has said inflation is a key metric for deciding when it will raise interest rates.
The Australian dollar was 0.3 percent higher at $0.7668, having risen to a 3-month high of $0.7760 last week thanks in part to the country’s relatively higher debt yields.
Treasuries advanced earlier as Labor Department data showed the consumer-price index was unchanged in July from a month earlier, in line with economist estimates. Oil prices rose to their highest in almost a month as speculation intensified about potential producer action to support prices in an oversupplied market.
Asian shares rose to one-year highs, expanding their gains this year to nearly 10 per cent, supported by a jump in oil prices and investor expectations of an extended phase of easy monetary policy around the globe. Palladium was up about 0.5 per cent at $696.70.
USA stock futures pointed to a lower opening after closing at an all-time high the previous day.
The Dow Jones industrial average was down 44.21 points, or 0.24 per cent, at 18,591.84, the S&P 500 was down 5.32 points, or 0.24 per cent, at 2,184.83 and the Nasdaq composite was down 14.15 points, or 0.27 per cent, at 5,247.87.
Yields on two-year notes rose two basis points to 0.75 percent.
Oil prices hit five-week highs on Monday, gaining 10 percent or more in a three-day rally as speculation intensified over potential producer action to support prices amid a crude glut.
USA crude for September delivery rose 19 cents to $46.93 a barrel.
Spot gold up 0.4 percent at $1,340.49 an ounce by 2:19 p.m. EDT (1819 GMT).
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U.S. gold settled up 0.3 per cent at $US1,347.50.
