Investors look past Trump speech toward fed moves
- Author: Zachary Reyes Mar 02, 2017,
Mar 02, 2017, 11:55
"Aside from Chair [Janet] Yellen, if there was just one Fed official markets wanted to hear from to validate a March hike, it was Brainard", said Sean Callow, senior currency strategist at Westpac, pointing to her previous cautious line on an early rate increase and her tendency to pick and choose the timing of her comments. The price index for PCE excluding food and energy also rose 1.7%, with both indices approaching the target 2% growth rate.
The Fed left rates unchanged in February after raising its benchmark rate in December to a range of 0.5 percent to 0.75 percent and predicting three rate hikes in 2017.
The dollar firmed in Asia Wednesday after two top Federal Reserve officials suggested United States interest rates could rise this month, while Donald Trump's speech to Congress received a mixed response.
Kaplan said US consumers were positioned to push the economy to grow more than 2 percent this year.
Hong Kong was up 0.2 percent in the afternoon while Shanghai ended 0.2 percent higher and Singapore put on 0.7 percent.
And result, Eurodollar and Fed Fund futures traders reacted as if stung, and trading below 50% earlier today, the March rate hike odds have soared as high as 68% over the past hour - they were at 54% before Dudley started talking - effectively above the Fed's permissive threshold.
"The case for monetary policy tightening has become a lot more compelling", New York Fed President William Dudley told CNN on Tuesday evening.
The greenback's broad gains on the day generated a almost 0.8 percent rise in the dollar index, which measures the currency against a basket of six major peers, to reach its highest since January 11.
The minutes portrayed some of the 12 presidents of regional reserve banks as increasingly ready to move faster on rates. Swaps also indicate the chance of a move is rising. The overall manufacturing PMI slipped to 54.6 from 55.7 in January, below the median forecast of 55.6.The pound has been struggling in the face of figures in the past fortnight suggesting the United Kingdom economy was finally beginning to suffer from the uncertainty around Britain's planned exit from the European Union over the next two years.
Asian equities and the U.S. dollar strengthened, while gold, the Japanese yen and core bonds fell during Wednesday's Asian session in response to Trump's speech, reflecting an easing of risk sentiment.
The Pound has risen by 0.2% against the Euro today but dropped against the US Dollar by a small amount following the news that United Kingdom manufacturing has slowed by more than expected. China's official factory gauge firmed in February as producer prices rebounded. The Australian dollar rose 0.24 percent to $0.7673, coming back up from a two-week low of $0.7646 on Tuesday.
The main focus of the markets was US President Donald Trump's testimony in front of Congress. Trump's speech was optimistic about the US economy and markets welcomed his pro-growth agenda.
Futures on the S&P 500 were flat after the index jumped 1.4 percent on Wednesday.
US consumer spending cooled in January as demand for automobiles and utilities fell, but inflation recorded its biggest monthly increase in four years, raising the probability of an interest rate hike from the Fed this month.
That drove the return for holding dollars on the debt market higher, with 10-year Treasury yields last up around 5 basis points at around 2.4 percent. Interest rates on common financial products will climb.
Bucking the trend was silver which added 0.4% to US$18.39 an ounce.