The market is now pricing a 42 percent chance of a September hike and a 64 percent chance of a move in December but if non-farm payrolls are strong “then September will need to get repriced a little bit I would have thought”, he said. The likelihood of a boost to rates at the Fed’s meeting on September 21 reached 40 percent, up from 32 percent the day before, futures prices show.
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In morning Asian trade, the US dollar was broadly higher against most local currencies. He more far more explicit when he said Yellen’s comments were consistent with a possible September rate hike and 2 rate hikes this year is possible.
Mired in a world of low growth, low inflation and low interest rates, officials from the Fed, Bank of Japan and the European Central Bank said their efforts to bolster the economy through monetary policy may falter unless elected leaders stepped forward with bold measures.
Christopher Vecchio, a currency analyst at DailyFX, said Yellen´s speech had given the dollar trade a needed shot in the arm on currency markets.
The greenback strengthened on Friday, following an optimistic speech from Janet Yellen about the U.S. economy at the Jackson Hole symposium. Throughout the past week we heard consistently hawkish comments from USA policymakers who all seem to agree that the country is close to full employment and inflation is on the rise.
Eurozone government bond yields, including Germany’s 10-year bond, fell after Ms Yellen remained vague on timing and were down overall on the day.
In a speech Friday at the annual Jackson Hole symposium of central bankers, Yellen said that the case for a USA rate hike had “strengthened”, sharply boosting the greenback.
Stocks and bonds, which rose moderately in price after Yellen spoke, both reversed after Fischer’s comments.
The perceived chances of a rate hike in September climbed to 30% from 21% the previous day, according to CME Group’s FedWatch tool.
Banking shares, which stand to gain in a higher rate environment, advanced. In addition, the PCE annualized index rose slightly to 4.4%. So far the economic impact of Brexit has been limited but if there are more headlines about Prime Minister May invoking Article 50 early next year, GBP/USD could extend its losses quickly.
“Taken in balance the market has found a new direction today; it’s just with those comments coming so close together we got bounced around a little bit here”.
About 20 minutes after the opening bell, the benchmark Nikkei 225 index soared 2.16 percent, or 353.34 points, to 16,714.05, rebounding after ending in the red for two straight days. It was last up 7.3% at 14.63.
Herbalife Ltd. tumbled after hedge fund manager Bill Ackman said that top investor Carl Icahn is trying to sell his stake in the nutrition company.
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The S&P 500 posted 29 new 52-week highs and one new low; the Nasdaq Composite recorded 108 new highs and 23 new lows.
