August 17, 2016

FXNet, New York Fed President says "it will be appropriate to raise interest rates further"

“We’re edging closer towards the point in time where it will be appropriate I think to raise interest rates further.”


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This article is originally referred from FXNet Market News.

Asian markets traded mixed on Wednesday, as the sentiment hit from a lower finish in the U.S. stock market offset the positive impact of a rise in oil prices. The Nikkei trades 0.44% higher, Hong Kong trades flat whilst Shanghai and the ASX trade slightly lower.

New York Fed President William Dudley said that as the U.S. labour market tightens and as evidence of rising wages builds, “we’re edging closer towards the point in time where it will be appropriate I think to raise interest rates further.” A permanent voter on policy and a close ally of Fed Chair Janet Yellen, also included an unusual warning on low bond yields and were seen as more hawkish than a cautious message last month. Data released on Tuesday lent some support to their views, with U.S. industrial production and housing starts expanding in July, although consumer prices were unchanged from June, following two straight monthly increases of 0.2 percent.

In FX space upbeat jobs data saw the Kiwi initially rally beyond the 0.73 handle against the US dollar. The gains were quickly reversed as the solid jobs figures were only a result of a new methodology implemented to calculate the employment data, which meant the bounce in jobs in Q2 was less upbeat than seemed. Moreover, lower oil prices added to renewed selling in the major amid increased speculation surround further RBNZ easing after the unimpressive jobs data.

The Japanese yen also weakened as Japans Asakawa commented the BoJ will respond to the FX market if there are excessive moves. We have seen this type of jawboning before however the market appears to have paid attention this time and USD/JPY moves from 100.20 to the 101 handle. Having peaked at fresh highs yesterday , Gold continues to retreat and sits just above $1340 while oil prices slid from five-week highs on doubts that possible talks by producers to rein in a growing glut would be successful. Brent to $48.77 and WTI to $46.24  a barrel.

So to the day ahead and first up we have UK Labour Market Report (0930 BST) Today’s update will be closely examined as one of the first bits of hard data on Britain’s post-Brexit economic profile. Economists are predicting a slowdown in growth and higher odds of a recession and today’s release may feed into that outlook. In particular, pay close attention to the claimant count data, which has already been wobbly for months. Survey data released last week strongly hints at no less as the UK jobs market suffered a dramatic freefall in July, with permanent hiring dropping to levels not seen since the recession of 2009.

US FOMC minutes (1900 BST) The FOMC provided a more optimistic tone at its July meeting, saying that near-time risks to the economic outlook had diminished. However, below-target inflation, a global economic slowdown and uncertainty over the impact of Brexit saw the Fed holding fire on raising interest rates. Fed policymakers at the time said they would continue to closely monitor inflation data and global economic and financial developments. The minutes will provide more information behind the Fed’s latest policy decision and may offer clues on the timing of the next interest rate hike.

Original Source: FXNet Market News

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