“Brainard thinks asymmetric risk in the “new normal” economy calls for monetary prudence in the removal of policy accommodation”.
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The rising expectations of a September rate hike had sent the three major USA stock indexes tumbling on Friday in their worst decline since the Brexit vote.
Silver rose 0.5 per cent to $US19.13 an ounce, having touched its lowest since September 1 at $US18.69. “It is still the same story of a $1,300-$1,400 range for gold”.
The rising expectations of a September rate hike had sent the three major US stock indexes tumbling on Friday in their worst decline since the Brexit vote. No governor has been on the losing side of a Fed vote since 2005. The Stoxx Europe 600 dropped 1% to 342.23, ending at the lowest level in more than two weeks.
ANALYST’S COMMENT: “The continuous debate surrounding the prospect of a USA rate rise continues to dominate market sentiment as US policymakers continue to gear up the markets for a further rate rise later this year”, said Michael Hewson, chief market analyst at CMC Markets.
Strong gains in materials and healthcare offset losses in energy. Retail sales data on Thursday and consumer inflation data on Friday will next be watched for signs of whether USA economic strength can support a rate increase.
Speculators have pared bullish bets on the Canadian dollar, Commodity Futures Trading Commission data showed on Friday.
USD/JPY is supported around 101.00 levels and now trading at 101.87 levels.
The Federal Reserve blackout period is now upon us, giving traders a week to speculate on the impact of what has been said and the few pieces of data we get between now and the decision next Wednesday.
“Today’s new normal counsels prudence in the removal of policy accommodation”, said Brainard, a permanent voting member and the last official scheduled to speak ahead of the Fed’s policy-setting meeting on September 20-21.
The dollar was steady at 101.860 yen after shedding 0.8 per cent overnight.
Its 10-year Japanese counterpart yielded minus 0.020%, nudged away from a six-month peak of minus 0.010% reached recently. The FTSE 100 index of leading British shares gave up 1.2 percent.
After Friday’s 2.5 percent slide, the S&P 500 (SPX) was up almost 28 points, or 1.3 percent, at 2,156 as of 2:16 p.m.
The Fed’s 10-member Federal Open Market Committee will meet September 20-21 to discuss the possibility of raising the federal funds rate for the first time this year. It has risen from 102 basis points on August 30.
Ten-year Treasuries remained little changed, with yields near 1.68 percent.
Brainard highlighted reasons to raise rates with caution: US inflation has been persistently below the target of 2 percent; labor market slack has been greater than anticipated; financial transmission from foreign market is strong and poses a risk; and the ability of monetary policy to respond to shocks is asymmetric. Brent crude traded at $48 per barrel on Tuesday.
Open Text Corp soared 7.8 per cent to $84.02 after the software company said it had agreed to buy Dell-EMC’s enterprise content division for $1.62 billion.
Asian stocks rose on Tuesday, boosted as Wall Streetrallied overnight after Federal Reserve governor Lael Brainard calmed Marketswith remarks that appeared to reduce the prospects of a near-term Interest Ratehike.
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Spot gold was up 0.05 percent at $1,328.32 an ounce by 3:12 p.m EDT (1912 GMT), with US gold futures settling down 0.7 percent at $1,325.60 per ounce.
