However, the markets are still focused on the US Federal Reserve and its path to interest rates after Fed chair Janet Yellen said last week that the case for a rate hike was strengthening. The New Zealand dollar USDNZD, -0.2349%, now the highest yielding G-10 currency, is up almost 5% against the dollar so far this year even as that country’s central bank has systematically cut interest rates, because investors are hungry for yield, analysts say. Shortly afterwards Vice Chair Stanley Fischer suggested a hike was possible as soon as September.
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However, Fischer used an interview on Bloomberg Television to insist that negative rates will not take root in US, insisting that the Fed was not “planning to do anything in that direction”. Data on Tuesday showed US consumer sentiment rose to 101.1 in August, handily beating expectations for a reading of 97.0. The calculation assumes the effective fed funds rate will average 0.625% after the central bank’s next increase.
Spot gold prices (XAU=) hit a six-week low of $1,311.65 (1,003.01 pounds) on the strength in the dollar. It has made session high at 1.3102 and lows at 1.3060 levels.
United States stocks slipped after strong U.S. economic data stoked concerns about the impact of a potential Federal Reserve interest rate hike this year and a drop in technology shares, while European stocks and the dollar hit multi-week highs. Economists expect a contraction at a 1.5 percent annualized pace as growth was shaken by wildfires in northern Alberta that disrupted oil production.
Germany’s consumer price inflation held steady in August after accelerating in the previous three months, preliminary data from Destatis showed Tuesday.
The greenback USDJPY, +0.10% has shed almost 15% of its value against the Japanese yen, considered a safety play, over the same time.
“Now we are waiting for the next big thing, which is payrolls (U.S.jobs data) on Friday”, he added, saying the first batch of Q3 GDP data at the end of October would be key.
US consumer confidence rose to an 11-month high in August, with households more upbeat about the labour market, in a further sign that the economy was regaining steam after faltering in the first half of the year.
The US dollar rose against other major currencies as recent hawkish remarks from Federal Reserve officials raised market expectation for an interest-rate hike by year-end.
Speaking at the Fed’s annual mountain retreat meeting at Jackson Hole, Wyoming, Janet Yellen was cautiously positive on the U.S. economy. Visit MarketWatch.com for more information on this news.
USA gold futures slipped 0.2 percent to $1,313.90.
The U.S. dollar index was up 0.21% to 95.73 in morning trading in Europe.
Government-bond prices in the USA remained relatively flat Tuesday amid light trading as investors continued to digest remarks by federal officials. Benchmark 10-year US Treasury yields were last at 1.565 per cent, roughly unchanged from late Monday.
Dogged by rate hike uncertainty, the dollar dropped to as low as 99.550 yen in mid-August and came within sight of 99.000 yen – a 2-1/2-year low struck in June against the safe-haven Japanese currency after the Brexit vote.
The precious metal is particularly sensitive to a rise in rates as it increases the opportunity cost of holding non-yielding commodities such as bullion.
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The S&P 500 market bellwether was down 0.2% at 2,175.
