His comments comes shortly after Fed chair Yellen’s speech on the future United States monetary policy toolkit, which did not make any mention of a negative interest rate policy.
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The case for a rate hike – a plus for the dollar – won more support Tuesday as United States consumer confidence in August sat at its highest level in nearly a year.
“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.
Fischer’s comments were in line with remarks he and Fed Chairperson Janet Yellen made on Friday at a conference in Jackson Hole, Wyoming, indicating that the time to lift rates again was nearing.
Higher interest rates tend to make a currency more attractive to investors seeking returns, but a stronger dollar can erode the earnings of USA corporations that sell their goods overseas.
Today has a somewhat heavier economic calendar, with inflation and unemployment data from the euro area and US reports on private sector employment, pending home sales and Chicago-area business activity slated for release later in the session.
The Labor Department’s August nonfarm payrolls report will be released Friday morning. Traders will also be watching the Chicago purchasing managers’ index for signs of strength.
AUD/USD is supported around 0.7490 levels and now trading at 0.7508 levels.
The signs of weakness in the economy and the uncertain outlook for USA monetary policy led sterling to slip back towards $1.30.
Yen bulls were also kept in check after Japan’s Chief Cabinet Secretary Yoshihide Suga told Reuters on Tuesday that the government will respond “appropriately” to unwelcome yen gains. The AUD/USD was under pressure on Wednesday, finishing at.7502, down 0.0006 or -0.08%. The Dow industrials dropped 0.3 percent while the S&P 500 and the tech-heavy Nasdaq shed about 0.2 percent each. Earlier today, the Private Sector Credit report for July came in as expected at 0.4%.
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The dollar held its ground Wednesday as traders bet on a United States rate hike while poor Japanese factory output pressured the yen. The NZD/USD closed at.7251, up 0.0033 or +0.46%. Sterling has fallen more than 1 percent against the dollar since Friday’s comments from Yellen and Fischer at a meeting of global central bankers. But businesses were slightly more confident for themselves, with almost 34 percent expecting an improvement, compared with 31.4 percent in July.
