Published: Sat, March 04, 2017
Markets | By Lucia Cruz

United States dollar climbs on Fed officials' comments

He is the third ranking member at the Fed behind Chair Janet Yellen and Vice Chair Stanley Fischer.

Yields on USA debt rose on Wednesday as investors priced in the increased chance of an interest rate hike in March, after comments by New York Fed President William Dudley lifted market expectations.

Elsewhere in the speech, she indicated that the economy was meeting the Fed's expectations.

Various Fed officials suggested that the rise in inflation and the low 4.8% unemployment rate were evidence that the central bank is now close to achieving its dual mandates of maximum employment and stable prices. Labour tightness, combined with rising inflation, could encourage the Federal Reserve to raise interest rates at its March 14-15 policy meeting.

The personal consumption expenditures price index, which the Fed eyes carefully in weighing rate hikes, rose 1.9% on the year in January, data released Wednesday by the Commerce Department shows. Brainard said that a rate increase would be "appropriate soon" if the economy continues to progress. The bullish money manager positions have increased six of the last seven weeks, and takes total net length to its highest since the start of December. But until as recently as this week, Wall Street saw a rate hike as far likelier in June.

Already, though, traders in futures markets have put the probability of a rate hike at 75%, according to data tracked by the CME Group.

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Stock markets in Asia were also pulled lower, with MSCI's broadest index of Asia-Pacific shares outside Japan off nearly 0.3 per cent in early trade.

"U.S. equity markets have been detached from reality.the valuations on stocks are just completely out of kilter with anything we've seen before", Tony Cross, market analyst for TopTradr, said in emailed comments. He said he was confident that the Fed could keep the economy on a "sound footing" even as the Fed raises rates.

Since mid-2016, however, the US economy has shown more resilience, and risks from overseas have diminished, Yellen said.

In prepared remarks at the Executives Club of Chicago, Yellen pointed to economic improvement and the receding of global risks as key factors bolstering a further adjustment of the nation's interest rate. In estimating three rate hikes for 2017, the Fed was indicating a quickened pace of increases.

Coupled with bullish labor market data in which jobless claims fell to a 44-year low, and more dollar-friendly Fed chatter from Governor Jerome Powell, USD/JPY pushed through resistances at 114.15 (23.6% Fibonacci retracement) and 114.31 before running out of steam at 114.50.

She said the Fed's employment goal had largely been met and inflation was perking up.

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