The Australian dollar was trading at $0.7517 USA, down from levels above $0.77 last week.
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Goldman Sachs has further cut its view on the likelihood of a rate hike next week by the U.S. Federal Reserve, dropping it to just 25 percent from 40 percent after the final round of Fed speakers on Monday declined to nudge markets in the direction of further policy tightening. “It was looked at as a safety trade early in the morning”.
The comments came after Boston Fed President Eric Rosengren said on Friday that low interest rates are increasing the chance of overheating the USA economy.
CURRENCIES: The euro was flat at $1.1233 while the dollar rose 0.4 percent to 102.27 yen.
In Hong Kong, the Hang Seng Index dropped 74.84 points, or 0.3%, to 23,215.76, after a drop Monday of more than 800 points.
The Fed Governor Brainard (a voter in 2016) said the central bank should be careful in not removing accommodation too quickly, urging continued prudence before hiking. That was seen as a sign the Fed will refrain from raising rates at a policy-setting meeting next week. In Tokyo, after climbing 0.7 percent in the previous session to the highest since August 31.
Although most Fed watchers did not previously view a September interest rate hike as likely, those chances diminished further after the Commerce Department reported that U.S. retail sales fell 0.3 per cent in August from the prior month. “PGM (platinum group metals) prices are expected to improve modestly on structural drivers into fourth-quarter 2016”, Citi Research said in a note. When she didn’t, the market cheered her position pushing stocks up more than 1%. As the last Fed official to speak before next week’s meeting, she spurred a decrease in the odds of a September rate increase to 22 percent from 32 percent a week ago.
Brainard’s comments were the last from a Fed official ahead of the central bank’s policy meeting on September 20-21. Brent crude, the benchmark for worldwide oil prices, slid $1.22, or 2.5 percent, to $47.10 a barrel in London.
Gold held on to its losses early on Wednesday after falling 0.6 percent the session before, with the dollar advancing versus the yen.
Exxon Mobil sank $1.34, or 1.5 percent, to $85.95 while Chevron shed $1.66, or 1.6 percent, to $100.59 and Baker Hughes lost $1.58, or 3.2 percent, to $48.12.
But the bounce evaporated as Wall Street opened lower and tumbling crude prices on the back of worries over a supply glut sent the sector index down more than 2.8 per cent, making it the worst performer in Europe. The GBP/USD was down 0.43% at $1.3272, with the daily price ranging from $1.3277 to a peak of $1.3342.
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CURRENCIES: The dollar rose to 103.20 yen from 101.98 yen late Tuesday in Asia. Australia’s dollar rose 0.2 percent to 74.82 US cents, after tumbling 1.4 percent in NY, the most since June 27.
