Federal Reserve Chairwoman Janet Yellen on Friday said the case for another interest-rate hike is strengthening, sending a strong signal the U.S. central bank is preparing to increase rates as soon as next month.
On Thursday, the major American currency happened to be range-bound during illiquid Asia trade as key currencies kept treading water ahead of the global major bankers' gathering in Jackson Hole, Wyoming, at which Fed Chair Janet Yellen might offer fresh clues on American monetary policy.
Fed officials including Vice Chairman Stanley Fischer along with New York Fed President William Dudley have recently helped some traders to lift their bets that the Fed is braced for rate hikes again sooner rather than later, while some financial analysts foresee Yellen will echo their signals.
On Wednesday, futures markets were indicating an 18% probability that the American major financial institution would lift rates at its policy gathering next month, and an approximately 50% chance of a rate hike in December, as CME Group's FedWatch states.
A portion of the financial market is currently expecting hawkish overtones after Dudley.
Aussie and Kiwi head north ahead of Yellen’s speech
The Australian as well as New Zealand dollars went up against their American counterpart, as sentiment on the US dollar turned more fragile ahead of American data due later in the day and a Yellen’s speech on Friday.
The currency pair AUD/USD soared 0.21%, trading at 0.7629.
Market participants are waiting to see if Yellen will restate her hawkish view of the American economy expressed by Fed representatives the previous week or echo the minutes of the Fed’s July gathering, which pointed out that Fed officials are divided on when to lift rates.
Traders were also looking ahead to reports on American jobless claims as well as durables goods orders, due later Thursday, for further clues on the strength of the US economy.
The currency pair NZD/USD descended 0.08%, being worth 0.7319, thus re-approaching a recent 15-month peak of 0.7347.
Meanwhile, the commodity currencies gained some support as crude prices bounced back on Thursday, notwithstanding a sudden soar in American stockpiles last week.
On Wednesday, the evergreen buck grew, moving off its recent minimums against the major Japanese currency overnight, as financial markets looked to a meeting of global major bankers in Jackson Hole, Wyoming for hints whether the Fed is braced for raising interest rates again or not.
Tuesday’s data revealed that in July, new American single-family home sales suddenly soared, reaching their highest value in almost nine years as demand surged broadly, brightening the housing market outlook.
At the end of the week, Fed Chair Janet Yellen is expected to address the key bankers gathered for the annual mountain retreat, which starts on Thursday.
Recent hawkish comments from Fed Vice Chairman Stanley Fischer as well as New York Fed President William Dudley have spurred some investors' hopes that Janet Yellen might take a less cautious tone.
The US dollar soared 0.1% to 100.30 yen having nudged below 100 yen overnight to 99.925.
The dollar index, traditionally estimating the evergreen buck’s strength against a basket of six key counterparts, grew 0.1%, being worth 94.593.
Aussie and Kiwi tumble moderately in Asia
The New Zealand and Australian dollars descended modestly after recent data revealed that missed hopes as well as cautious trade ruled ahead remarks due at the end of the trading week from the Fed Chair.
In Australia, construction work done edged down 3.7% during the second quarter, quite below the tumble of 1.9% observed quarter-on-quarter. Earlier, in New Zealand, July’s trade balance came in at a deficit of about NZ$433 million month-on-month as well as at a deficit of NZ$3.03 billion year-on-year. Both those outcomes have turned to be wider than expected.
The currency pair NZD/USD was worth 0.7285, down 0.05%. Meanwhile, AUD/USD sagged 0.01%, trading at 0.7614. USD/JPY traded at 100.26, showing a 0.02% rise.
Overnight, the greenback remained broadly lower against the other key currencies, as market participants remained cautious ahead of Friday’s statement by Fed Chair Janet Yellen.
In June, new home sales were revised down to 582,000 units a 1.7% revenue, from the previous reading of +3.5% to 592,000 units.