Physical gold demand slowed in top consumer China last week, while a strike by jewellers protesting against the imposition of a tax curbed demand in No. 2 market India. Investors worry that a possible Brexit would affect economic growth, push back United Kingdom rate hike expectations and freeze the huge foreign investment flows Britain needs to fund its current account deficit, one of the biggest in the developed world at about 4 percent of output.
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The dollar was fetching 113.76 yen USDJPY, +0.51% compared with ¥113.02 late Tuesday in NY.
USA core inflation increased more than expected in February, and US housing starts beat expectations for the month, which strengthened the dollar against major rivals.
The US dollar will probably respond favorably to FOMC signals and Ms Yellen will try to keep her options open, Alan Ruskin, Deutsche Bank’s global co-head of foreign-exchange research in NY, wrote in a research report. Production is expected to slip by 0.2 percent.
US equities turned higher by the time gold prices settled Monday, while oil prices were lower. Higher interest rates in the USA could make those currencies less attractive to investors. In the previous session, it fell 3 percent.
Shares of Volkswagen were up 1.46 percent despite a US law firm saying that it will pursue claims of European customers harmed by the VW emissions scandal, adding to the automaker’s legal challenges, Reuters reported.
In early trading, Britain’s FTSE 100 fell 0.6 per cent to 6,136.50, France’s CAC-40 fell 0.5 per cent to 4,482.50 and Germany’s DAX shed 0.4 per cent to 9,945.74.
US crude-oil futures sank 2.3% to Dollars 36.34 a barrel as traders shifted their focus to an oversupply of crude.
Meanwhile, investors are waiting for the Fed to deliver its interest rate decision on Wednesday and give a fuller picture of the economy for the remainder of the year.
The gap between yields on Treasury two- and 30-year debt touched the least since 2008 as traders boost wagers that the Federal Reserve will raise interest rates this year. The Fed begins its own two-day meeting on Tuesday.
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The MSCI Emerging Markets Index retreated for the first time in four days, sliding from this year’s high as all ten industry groups declined. The Russian ruble dropped 1.7 percent versus the dollar, as falling crude prices overshadowed optimism that relations with Europe and the USA will improve after President Vladimir Putin ordered some forces to withdraw from Syria.
