All-time intraday highs were also reached. Hong Kong’s Hang Seng index was down 0.1 percent at 22,910.84 while Australia’s S&P/ASX 200 dipped 0.1 percent to 5,532.00. The stock was flat. The Standard & Poor’s 500 index slid 12 points, or 0.5%, to 2,178.15.
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New York Fed President William Dudley and Atlanta Fed chief Dennis Lockhart both said in public statements that the US central bank could raise the nation’s short-term interest rates at its September policy meeting.
Their comments came ahead of an annual meeting of central bankers from around the world in Jackson Hole, Wyoming, next week. His views on rate hikes were echoed by Dennis Lockhart – like Williams, not a voting FOMC member this year – who claimed at least one rate hike this year can’t be ruled out, although like Williams he did welcome a re-examination of the basic assumptions of central banking, including changing target inflation rates.
The Labor Department said inflation remains low, as prices paid by consumers were unchanged in July. While speculative interest may have driven these markets to multi-month highs last week as investors lowered the odds of a Fed rate hike, the traditional supply and demand fundamentals helped drive them lower.
The dollar rebounded somewhat Wednesday against the yen, unwinding some of its losses from the past week, as one prominent Federal Reserve official reminded investors that a September interest rate hike remained a possibility. The Nasdaq composite added 0.6 percent to 5,262.02.
Fed funds rate futures are pricing in a 50 percent chance of a rate rise by December, a small increase from earlier this week.
But the dollar recouped some of its losses in early trading after Dudley’s comments. Overall, inflation is up just 0.8 percent over the a year ago. It rose about 0.1 percent Wednesday.
The US dollar index slumped to 94.43 on Tuesday – the lowest since June 24 – prompting a short rally for gold.
“Policy uncertainty has been weighing on Japanese bonds for a while and now the currency market seems to be taking notice as well”, said Makoto Noji, a senior strategist at SMBC Nikko Securities in Tokyo. It also hit a three-year low of 87.245 pence per euro on Tuesday after United Kingdom inflation came in stronger than expected.
The data was the first in a run of July economic data that should show some of the initial impact of the Brexit vote on the economy. Trading ranged at $1,344.40-1,347.95 so far.
The core measure of consumer price inflation which does not include energy and food, fell to 2.2%, from a previous 2.3% year on year rate in the previous month, in a report released by the labour department.
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In other commodities, the Brent crude spot price fell 0.11 percent to $48.84 per barrel, while the Texas light sweet crude spot price increased 0.02 percent to $46.30 so far on Wednesday.
