United States consumer price index data, due for release on Tuesday, is also in focus as if it comes in lower than expected, it is also bound to boost expectations for lower U.S. interest rates for longer.
Advertisement
Even firmer oil prices failed to cheer on investors. The two-year yield, which is sensitive to traders’ views on Fed policy, was up 2 basis points at 0.750 percent after touching a near three-week peak at 0.758 percent, according to Reuters data.
The US dollar – which had earlier dropped by as much as 1.2 per cent – regained some ground after the remarks, and was down 0.6 per cent this evening.
A Labor Department report released August 5 showed two straight months of strong job creation in June and July following a tiny increase in May that raised worries about the health of the economy. Palladium was up about 0.5 per cent at $696.70.
The FOMC left interest rates unchanged when it met last month, but said in a post-meeting statement that “near-term risks to the economic outlook have diminished”. Benchmark 10-year Treasury notes were down 6/32 in price for a yield of 1.575 percent, up 2 basis points from late on Monday.
The dollar fell to 100.25 yen from 101.25 yen.
In Toronto, Canada’s main stock index also fell on Tuesday, dragged lower by some mining and energy companies despite the advance of gold and global oil prices.
US gold rose 0.5 percent to $1,354.70 an ounce.
These are followed by inflation data for July, which is forecast to show a 0.2% rise mom and 0.9% (from a previous 1.0%) year-on-year. That’s why the Fed targets 2% growth in its preferred inflation gauge, which is released by the Commerce Department.
Metals prices also rose.
Also on the Comex, silver futures for September delivery tumbled 31.7 cents, or 1.58%, on Friday to settle at $19.70 a troy ounce. Copper edged up 2 cents to $2.17 a pound.
Dudley, a permanent voter on rates and a close ally of Fed Chair Janet Yellen, gave the market-moving interview nine days before the annual meeting of top central bankers in Jackson Hole, Wyoming, a venue the Fed often uses to telegraph policy plans.
“Overall, these factors suggest the outlook for the US industrial sector has improved modestly and support our expectation of healthier economic growth in the second half of 2016”, said Jesse Hurwitz, an economist at Barclays in NY.
“The Fed is using the dollar as sort of a tool of monetary policy”, he said.
Tea maker Hain Celestial Group delayed its quarterly report because of accounting issues and said it doesn’t expect to reach its financial projections for the year. Coty said it is “premature” to comment on how the combined business will do.
With $13 trillion of negative yielding bonds, and another $10 trillion plus yielding between zero and 1 percent, higher inflation would be the needle that pricks this massive bond bubble.
TJX Cos.(TJX) shares tumbled 2.2% despite the fact that its earnings beat estimates, as its outlook for the current quarter (http://www.marketwatch.com/story/tjx-third-quarter-outlook-disappoints-stock-falls-2016-08-16) landed below expectations. Its stock jumped $4.11, or 7.5 percent, to $59. Its stock rose $3.56, or 3 percent, to $121.59.
There was still a “strong feel-good factor for the currency”, and SA’s rates still provided attractive returns, he said. It was the strongest pace of new home starts since February.
Advertisement
In early Monday trading, EUR/USD rose 0.3%. Overall industrial output measures factory, utilities and mining production.
