US Dollar Edges Higher as Investors Await Fed Meeting
Sep 22 2017 by Cristina Jennings
This story will be updated as new information becomes available.
The dollar hit an eight-week high against the yen on Monday, supported by a rise in US Treasury yields, as traders eyed a Federal Reserve meeting starting the next day for clues on whether interest rates could rise again by year-end.
U.S. and European markets finished higher overnight, and will likely provide a strong lead for the local share market.
High-dividend stocks like household goods makers fell.
"The significance of the announcement, whilst expected, should not be under appreciated". "So far, the market is taking it in stride, but I don't know if it should".
The Dow Jones index ploughed through the USA trading day to close at its fifth consecutive fresh-record - up 0.3 per cent to 22,331. What's more, its investments to maintain the current size of its USA debt holdings financed roughly 40 percent of America's budget deficit previous year.
"First, is the Fed actually more on a present course to hike than we had previously thought?", he says.
During the 2008 financial crisis, Washington slashed the key interest rate almost to zero in a bid to boost growth and jobs.
It maintained its guidance that one further interest rate hike was likely this year despite inflation coming in weaker than expected - adding timid price growth was being "closely" watched. The portfolio primarily consists of government and mortgage-backed bonds.
In the past, the yield curve, or the gap between rates on short- and long-term Treasuries, has reliably narrowed as the Fed raised rates to cool growth.
"Instead, the U.S. central bank made a decision to look past low inflation and said the harm of the Hurricanes would have no lasting economic impact", he said. It is expected on Wednesday to announce a milestone in closing the book on the crisis era: that it will start the process of shedding bonds as soon as October.
Domestically, investors will also be watching for tomorrow's gross domestic product data. The central bank may signal how likely a rate hike is by December, when some analysts foresee the next increase. The Fed now projects it will be 1.9 percent by the end of 2018, a touch below its earlier forecast of 2 percent.
The dollar index .DXY rose 0.75 percent, with the euro down 0.83 percent to $1.1892. The euro strengthened to $1.1985 from $1.1945. Qorvo slid $4, or 5.4 percent, to $70.32.
She also cautioned of the threat that cyberattacks pose to the financial system.
Food companies came under pressure after General Mills reported earnings that missed analyst expectations. The cereal maker slid $3.21, or 5.8 percent, to $52.17. The stock lost $4.29 to $22.74. Whole milk powder increased 0.6 percent to US$3,122 a tonne. The report from the National Association of Realtors pulled down homebuilder shares.
Benchmark 10-year Treasury notes were last down 8/32 in price to yield 2.229 per cent.
Energy stocks also rose as oil prices headed higher.
In Toronto, the TSX is rocking ahead, adding well over 96 points to stand at 15,389. ConocoPhillips gained 1.3 percent. Brent crude, used to price global oils, gained $1.15, or 2.1 percent, to $56.29 a barrel in London. Wall Street was poised for a similarly flat opening with Dow futures and the broader S&P 500 futures unchanged.
Alnylam Pharmaceuticals Inc (NASDAQ:ALNY) was a very notable riser, adding nearly 53% to $114.80 as it reported positive Apollo phase 3 results.
Spot gold was down 0.1% at $1,299.31 an ounce at 8.56am.
Markets overseas were mixed Wednesday. The FTSE 100 index of leading British shares was stable at 7,272. South Korea's Kospi lost almost 0.1 percent to 2,416.05.
In Australia, the S&P/ASX 200 slipped 0.11% with the telecommunication sector suffering the most losses.