“The market is now pricing around a 36 percent probability of a hike in September and it has moved from about 50 to 60 for December, which is considerably higher than a week ago”, said Rabobank’s USA -focused economist, Philip Marey.
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The U.S. Dollar Index, a measure of the greenback against a basket of six rival currencies, was little changed at 96.012. Investors are awaiting US non-farm payroll data this week for further clues on the timing of a USA rate hike after Fed officials sounded a hawkish note at a meeting last weekend.
The Australian dollar declined to $0.7505 from $0.7578.
Spot gold edged up 0.2 percent to US$1,313 an ounce after tumbling to as low as US$1,308.65 on Tuesday, its lowest since late June, pressured by the stronger dollar and growing expectations of higher USA rates.
Fed Vice Chairman Stanley Fischer said early on Tuesday that the USA job market is close to full strength and it is impossible to say whether the next interest rate hike would be “one and done”, according to media reports. In an interview on Tuesday, Vice Chair Stanley Fischer said the USA job market is almost at full strength and that the pace of rate increases by the Fed will depend on how well the economy is doing.
“Now we are waiting for the next big thing, which is payrolls (U.S.jobs data) on Friday”, he added, saying the first batch of Q3 GDP data at the end of October would be key.
Friday’s nonfarm report for August, as well as other data, could reinforce hawkish messages from Yellen and other Fed officials.
Traders are already looking towards the monthly U.S. job report due at the end of this week as the next major catalyst in gold prices. The British pound declined against USA dollar on Tuesday as comments by a high-ranking Federal Reserve policymaker and strong USA economic data kept investors guessing about the possibility of a September rate hike.
“It’s finely balanced and remarkably stable. and yet dollar/yen moved higher again, setting the scene for the Japanese equities bounce overnight”, Societe Generale FX strategists said on Wednesday, adding that the dollar would have to break above 105 for this move to look like much more than “noise”. On Wednesday, it gained a third of a percent on the day to trade at 103.335 yen, its strongest since July 29. The Nasdaq Composite closed down 9.34 points, or 0.18 per cent, at 5,222.99.
Still, technical charts show that gold prices may retreat further to US$1,308 or even US$1,287.
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Brent crude was last down 60 cents, or 1.22 per cent, at $48.66 a barrel. The Aussie has been on a downtrend since hitting a near 3-1/2 month high of $0.7760 earlier in August.
