OIL: U.S. crude rose 24 cents to $46.15 a barrel in NY.
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While some investors had speculated that Brainard would switch over to the more hawkish camp, the Fed governor said Monday she wanted to see a stronger trend in U.S. consumer spending and evidence of rising inflation before the Fed raises rates.
Asian stocks were mostly higher on Tuesday after a Federal Reserve board member said she was in no hur. The S&P 500 closed up 1.47 per cent at 2,159.04 while the Dow Jones Industrial average closed up 1.32 per cent at 18,325.07.
The dollar was on the defensive on Tuesday as markets remained hostage to seesawing speculation on the outlook for USA rates, with dovish comments from a Federal Reserve policy maker providing the latest catalyst.
“The risk is that Ms Brainard goes from dove to hawk and signals a rate hike on the last day before the Fed begins its pre-meeting quiet period”, said Jasper Lawler, an analyst at CMC Markets. Japan’s Nikkei .n225 added 0.6 percent, South Korea’s Kospi .ks11 rose 0.9 percent and Australian stocks .axjo advanced 0.7 percent.
Traders reduced their expectations for a September rate hike to 15% from 24% on Friday and for a December hike to 54.5% from 59.2%, Reuters reported, citing the CME Group’s FedWatch tool.
The Fed’s 10-member Federal Open Market Committee will meet September 20-21 to discuss the possibility of raising the federal funds rate for the first time this year.
Meanwhile, the Nasdaq Composite Index was up 86 points, or 1.7%, at 5,183, propelled by a rally in biotechnology shares. Low rates have fueled a steady rise in stock prices. Until the recent comments, investors had been expecting the Fed to delay a rate increase until December or later.
Next Wednesday and Thursday is the Federal Open Market Committee meeting, where members of the committee with vote on whether to raise interest rates this month, as well as release forward-looking guidance on the USA economy and future expectations of interest-rate adjustments.
USA stocks fell more than 1 percent on Tuesday, with energy stocks hit by lower oil prices and financials dropping on diminished prospects of a near-term rate hike.
Silver rose 0.2 percent to $19.15 an ounce. Brent crude, the benchmark for worldwide oil trading, lost 56 cents to $47.76 a barrel in London. The dollar was steady at 101.860 yen after shedding 0.8 percent overnight.
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Sterling, which had lost ground earlier in the day, was trading 0.13% higher against the dollar, exchanging hands at $1.3285 and was up 0.19% against the euro, fetching €1.1830.
