Yellen, in speech Friday, could send signal about next hike

Regolare Commento Stampare

The financial markets were mixed and volume below average on Thursday as numerous major players stood on the sidelines ahead of Fed Chair Janet Yellen's speech a Jackson Hole, Wyoming central bankers' symposium on Friday.

The Fed raised interest rates for the first time in almost a decade in December, but has kept them on hold since then on concern that headwinds from overseas and financial market volatility at home could hurt growth.

"I don't think greenback buying will accelerate sharply ahead of Yellen's speech, but more strong data could underpin the currency", Naoto Ono, an analyst in Tokyo at Ueda Harlow, wrote in a commentary.

While the Fed is widely expected to maintain rates at its September meeting, Ms Yellen's language on Friday morning will be assessed to see whether she takes a more aggressive stance.

Data on Thursday showed an unexpected drop in jobless claims last week and a rise in new orders for manufactured capital goods in July, also suggesting that the economy was resilient enough to absorb a rate hike. A broad index of Asian shares fell more than 10 percent in the two months after the hike. Going into the speech, investors have priced in a 24 percent chance of a rate hike in September, a 57 percent chance of a December rate hike and a 100 percent chance of a 25-basis point rate hike in September 2017.

Financials, which stand to gain the most in a higher-rate environment, rose 0.11 percent. The stock was the top percentage gainer on the S&P 500.

The Bloomberg Dollar Spot Index, which tracks the currency against 10 peers, rose 0.1 percent.

Spot gold was up 0.1 percent at $1,324.11 an ounce at 1131 GMT, while USA gold futures for December delivery were down $2.60 an ounce at $1,327.10. Stock futures were broadly flat in Asian trade.

In Tokyo morning trade, the greenback ticked down to 100.44 yen from 100.45 yen Wednesday in NY, while the euro bought US$1.1273 against US$1.1264.

The pair has traded in a narrow 99.55-102.83 band this month, and could move back toward the upper end of that range depending on Yellen's remarks, analysts say.

"With 40 hours to go before Janet Yellen's testimony at Jackson Hole, the dollar has finally caught a bid", Kathy Lien, managing director of FX strategy at BK Asset Management, said in a note.

US crude was a touch firmer at $46.80 a barrel following a roughly 3 percent drop overnight after an unexpectedly large inventory build in the world's biggest oil consumer renewed worries about oversupply.