While the Fed is considering an interest rate hike, which some say could come as early as this month, the Bank of Japan has been reticent in providing concrete promises of any new stimulus despite weak growth at home. New Zealand’s S&P/NZX 50 Index advanced 0.6 per cent. Markets are shut for holidays on Friday in China, Hong Kong, Taiwan and South Korea.
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Stock markets as well as the U.S. dollar swung wildly on comments from both members, but given the recent set of disappointing economic data from the USA in the past couple of weeks, investors and analysts now do not expect the Federal Reserve to increase interest rates in their policy meeting next week.
MSCI’s broadest index of Asia-Pacific shares outside Japan edged down 0.1 per cent.
Also on Thursday, U.S. weekly jobless claims data showed a tightening labor market with subdued layoffs last week, while underlying producer price inflation crept up in August.
The euro was at $1.1241 midday from $1.1248.
That decision will depend on yen moves and whether the board members feel that doing so would be necessary to reinforce the bank’s commitment to achieving its inflation target, they said.
Reports on Thursday showed United States industrial production contracted more than forecast, while retail sales unexpectedly slid, sending the odds for a rate increase from the Federal Reserve next week to below 20 per cent.
Stocks fell as investors dumped shares of banks in North America and Europe after the U.S. Department of Justice told Deutsche Bank DBKGn.DE to pay $14 billion to settle an investigation of its selling of mortgage-backed securities. The second quarter GDP data was upwardly revised to 0.2 percent quarter-on-quarter from the initial estimate of zero percent.
Meanwhile, the yield on the 10-year note, considered the Treasury market’s benchmark, climbed 3 basis points over the week but was unchanged on the day at 1.701%.
Futures traders are now pricing in a 12-percent chance of a rate increase this month, down from 15 percent on Wednesday, according to the CME Group’s FedWatch tool.
Expectations that the Fed will wait longer to raise rates is causing the long bond to underperform as lower rates are likely to boost inflation longer-term, which erodes the value of the debt.
On Thursday, the Swiss National Bank and the Bank of England held interest rates steady.
The dollar index .DXY , which measures the greenback against a basket of six major currencies, was up 0.69 percent to 95.941.
Brent crude slid 0.5 per cent to $46.33 a barrel, extending losses for the week to 3.5 per cent.
Investor optimism over the newest iPhone drove Apple shares up 3.5 percent to $111.77 and limited losses in US stocks.
Among oil stocks, Oil Search and Santos are gaining 2 percent each, while Woodside Petroleum is adding 0.3 percent after crude oil prices rose overnight. Elsewhere, the Australian dollar inched up 0.1 percent to $0.7520 after posting a 0.7 percent gain on Thursday.
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Spot gold fell to a two-week low, trading down 0.7 per cent to $US1,313.31 an ounce. Her views echoed St. Louis Federal Reserve Bank President James Bullard, who told CNBC in August that the September Fed meeting might be an apt time to raise interest rates.
