The dollar picked up against the yen Wednesday after comments from a senior United States central banker suggested the Federal Reserve could hike interest rates as early as September.
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Yields on French and Italian bonds are also near record lows, although Portuguese debt bucked the trend: The yield on its 10-year note climbed to 2.982%.
“Several suggested the committee would likely have ample time to react if inflation rose more quickly than they now anticipated, but they preferred to defer another increase until they were more confident inflation was moving closer to 2% on a sustained basis”, according to the minutes of the Federal Open Market Committee’s meeting.
US stocks are opening slightly lower Wednesday with phone companies and utilities continuing to take the biggest losses. Among the areas of concern: inflation, which remains below the committee’s 2 percent target rate, partly due to declines in energy prices.
The Fed left benchmark short-term USA rates unchanged at its last meeting in July but said near-term risks to the economy had diminished, leaving the door open for a possible rate hike this year.
Spot gold was up 0.3 percent at $1,351.94 an ounce at 0645 GMT.
New York Fed President William Dudley says “it’s possible” the central might hike rates as early as next month. The Nasdaq composite slid 28 points, or 0.5 percent, to 5,199.
The minutes said “a couple” of officials had advocated a rate increase at the July meeting.
Some Fed members “judged that another increase in the federal funds rate was or would soon be warranted”. But Fed officials this week have offered a more bullish outlook.
In early European trade, the dollar gained 0.2 percent on the day against the basket of currencies used to measure its broader strength, having bounced around half a percent on Tuesday.
Earlier this week, sterling had threatened to test a 31-year low of $1.2798 set in July, dogged by worries that forthcoming United Kingdom data could provide the first proof of economic damage from the Brexit vote in June.
The euro edged up 0.2 per cent to $1.131with the common currency on track to rise more than 1 per cent this week.
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Data published so far, however, shows limited tangible fallout from Brexit, with jobless claims unexpectedly falling in July. The CME Group’s FedWatch Tool indicates traders are pricing in a 82% probability the target will remain at 0.25% to 0.5% as of September 21, down just slightly from the 85% odds on Tuesday.
