In its July meeting, the Fed indicated that inflation in the economy has stalled and is likely to stay subdued in the near term.
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The euro was flat against the greenback at $1.1304, though it crept 0.1 percent higher against the yen to 113.44.
In their discussion of the USA economic situation, meeting participants agreed that the labor market had strengthened and that economic activity had been expanding at a “moderate” rate.
“Gold has prepared itself for any fallout in economic data, any dovish posture from a Fed official”, Phil Streible, senior market strategist at RJO Futures in Chicago, said by telephone.
Gold started this week on a weaker note amid increasing speculation on the timing of an interest rate hike by the Federal Reserve. Fed Chair Janet Yellen speaks Friday at an annual symposium in Jackson Hole, Wyoming.
Joni Teves, UBS strategist, told CNBC on Monday that, “I think that as USA data has surprised to the upside recently … the Fed prepares for a hike … it is understandable that gold comes under pressure, especially in these quiet summer months when liquidity is not great”.
The Indian currency ended higher by 13 at 67.06/$.
GBP/USD gained 0.36% to traede at 1.3181.
The kiwi recorded a 15-month high of $0.7351 mid-month. Orders for British manufacturing exports hit a two-year peak in August, data released on Tuesday showed.
“The proposed acquisition of Medivation is expected to immediately accelerate revenue growth and drive overall earnings growth potential for Pfizer”, Ian Read, Pfizer’s chief executive officer, said in a statement.
The FTSE 100 went through a weak trading day on Monday, remaining low in the afternoon as U.S. stocks also got off to a poor start. ICE Brent crude, the global futures benchmark, fell $1.65 or 3.2% to $49.23 a barrel. Oil rallied after a reported showed that Iran was sending positive signals that it may support joint OPEC action to prop up the market.
In commodities, oil prices gave back some of last week’s gains in belated response to rising United States oil rigs.
AUD/USD is supported around 0.7580 levels and now trading at 0.7613 levels.
Oil majors also took a hit, with Royal Dutch Shell B 36p lower at 1974p and BP off 6.5p to 427.9p.
USA stocks edged higher on Tuesday (Aug 23), but the tone of trade remained cautious ahead of Federal Reserve Chair Janet Yellen’s speech on the economy at the end of the week.
Investors were betting that there is a 50% probability that the Fed will resume its rate tightening cycle by December and that there is an 18% chance for a September rate increase, according to Federal Funds futures, a commonly used instrument to gauge rate expectations. Yellen’s speech will be closely watched to see if she too takes a more upbeat tone, and for any new indications on when the USA central bank is likely to raise interest rates again.
Sterling’s foray above the threshold was, however, short-lived as it shortly retreated to $1.3180, 0.37% higher against the dollar. YCS added over 0.4% on August 19.
The dollar dipped against the yen early on Tuesday, shedding of 0.2% to 100.120.
BONDS, CURRENCIES: U.S. government bond prices rose.
“While we do think that Janet Yellen may point the Fed in a more hawkish direction on Friday, there is likely to be continued ambiguity surrounding future U.S. monetary policy”, it said in a note today. The yields have traded in a range between 1.45 percent and 1.63 percent since mid-July. A drop in oil prices pulled energy companies lower.
The dollar index rose for the second day, after being in the red for five straight sessions, on prospects of the U.S. Federal Reserve raising interest rates in the coming months.
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On the whole, some committee members seem to be more optimistic than others, seeing the near-term risks to further improvement in the US economy as having “diminished”. US gold was flat at $1,344.
