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.
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Sterling weakened 0.6 percent to US$1.3249 after slightly softer-than-expected United Kingdom inflation data. The CME Group’s FedWatch tool, which uses fed funds futures rates to calculate market interest rate speculation, saw the odds of a September rate hike fall from 24% to 15%.
Even Apple’s 2.3 percent gain, after two US carriers reported strong demand for the new iPhones, was not enough to pull up the indexes. The Standard & Poor’s 500 index rose 31.23 points, or 1.5 percent, to 2,159.04.
ANALYST’S COMMENT: “The continuous debate surrounding the prospect of a USA rate rise continues to dominate market sentiment as US policymakers continue to gear up the markets for a further rate rise later this year”, said Michael Hewson, chief market analyst at CMC Markets. The US dollar is trading a little higher again today having come off a little yesterday on Brainard’s comments, which again suggests that traders are only writing off September and a hike this year remains very much on the cards, which is bullish for the greenback.
US crude fell 98 cents, or 2.1 percent, to $45.31 a barrel in NY.
The Australian dollar touched a almost seven-week low against the greenback of $0.7443, while the New Zealand dollar hit a more than one-week low of $0.7235.
Frankfurt, Paris and London all shed more than one percent, while Japan’s Nikkei lost 1.7 percent and Hong Kong 3.4 percent.
USA stocks opened lower for trading on Tuesday, dropping after a Monday rebound that brought the strongest day for the market since the United Kingdom referendum in late-June. The Nasdaq composite lost 65 points, or 1.2 percent, to 5,147.
The Dow Jones industrial average jumped 239.62 points, or 1.3 percent, to 18,325.07. 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.
Tesla Motors rose 2.0 percent after announcing that it upgraded its Autopilot software to use more advanced radar technology. The Australian dollar dipped to 0.7453 dollar from 0.7561 dollar. Potash stock added 4 cents to $17.01 and Agruim dipped $1.25, or 1.3 percent, to $93.96.
Market sentiment in Asia was improved after earlier data revealed that China’s industrial production rose by 6.3% in August, on a yearly basis, surpassing expectations for a 6.1% increase. Brent crude, the benchmark for worldwide oil trading, lost 40 cents to $47.92 a barrel in London. The Australian dollar was trading at $0.7517 USA, down from levels above $0.77 last week.
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The U.S. dollar bought 102.72 Japanese yen, higher than 101.84 yen of the previous session. The Aussie sank 0.5 percent to 75.31 USA cents, a day after it strengthened 0.3 percent.
