On Wall Street, stocks fell Friday after a number of Federal Reserve officials said it is nearly time to raise interest rates.
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Looking ahead to Monday’s trading session in Asia, there is yet again no major data releases or events scheduled to dictate direction in the Aussie, suggesting that United States rate expectations, along with movements in the USD/JPY which tends to be influential on the broader USA dollar index in Asia, will be influential on the Aussie today.
USA gold futures fell 0.48 percent to $1,319.60.
By the close of trading, seven of the 10 sectors of the Standard and Poor’s 500 index had fallen, led by a 2.1 percent drop in utilities. Hong Kong’s Hang Seng index rose 0.4 percent.
To markets hungry for direction from the U.S. Federal Reserve, Fed Chair Janet Yellen offered a sobering dose of uncertainty for monetary policy and the global economy on Friday, suggesting interest rates could rise faster than expected in coming months or just as easily crater back to zero.
She stressed that the Fed’s rate decisions will depend on whether the freshest economic data continue to confirm its outlook. She pointed to strong gains in employment and strength in consumer spending.
In addition to December, the Fed also has policy meetings scheduled in September and November, although prices for fed funds futures imply investors see scant chance of a rate increase at either of those meetings.
Business investment as a share of gross domestic product since 2008 has averaged almost a full percentage point below the previous decade’s average, according to government data.
The odds of a hike in September climbed to 30 percent from 21 percent on Thursday, according to CME Group’s FedWatch tool. Traders were pricing in a 60.2 per cent chance of a hike in December, up from 51.8 per cent on Thursday.
“Looking ahead, the FOMC expects moderate growth in real gross domestic product, additional strengthening in the labour market, and inflation rising to 2% over the next few years”, Mrs Yellen said in her prepared remarks.
“It’s clear from the Fed’s actions this year that it is aware of global risks, the impact of its own actions on those risks and any potential blow back to the USA economy and of the impact of a rising US dollar in doing some of its work for it”.
Fed Chairwoman Janet Yellen didn’t even mention the idea in a discussion of the Fed’s options for the economy should recession hit the USA, and other officials speaking on the sidelines of the Fed’s annual retreat here over the weekend made clear it is an approach they would like to avoid. “I think that’s something they wouldn’t want to deal with”. It held steady at 95.561 in early trading today.
The dollar rose to 101.86 yen from 100.57 yen the previous day. It extended those gains by 0.3 percent to 102.20 yen on Monday.
Other data in investors’ crosshairs next week include personal consumption on Monday, consumer confidence on Tuesday, and vehicle sales and factory activity on Thursday.
The US unit jumped 0.9 percent against the South Korean won and 0.7 percent against Malaysia s ringgit, while it also rose on the Taiwan and Singapore dollars, Philippine peso, and Indonesian rupiah.
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The dollar rallied quickly off Yellen comments that were perceived as hawkish, said Minh Trang, senior FX trader at Silicon Valley Bank in Santa Clara, California.
