U.S Dollar The U.S Dollar weakened slightly against major rivals on Thursday from its one year high. As the economic calendar was moderate on good news, the US Dollar still managed to weaken slightly despite manufacturing PMI for August rose to 58.0, which was more than forecasted. Continuous claims and Initial jobless claims also till August 9 also fell to 2.5 million and 0.398 million from the previous week, again better than expected by economists. Suggesting strength in the labor market, which has been one of the major concerns for Feds to conclude strengthening economy and tightening of the monetary policy by the central bank. Existing home sales remained unchanged at 2.4%, but were better than analyst expectations. Philadelphia Fed index for August rose substantially to 28.0 and the leading indicators showed growth in the third quarter to 0.9%. Today marks the second day of Jackson Hole Economic Symposium which is attended by central bankers, finance ministers, academics, and financial market participants from around the world. Philadelphia Fed President Plosser and Kansas City Fed President warn of dire outcomes from current policy stance. Feds current policy stance is risky in light of economic conditions I think we are running a risky policy given where the stance of the economy is and seems to be going Plosser said on Thursday. Fed Chairwoman Janet Yellen and her allies on the central bank are signaling that economic conditions are likely to support a first rate hike in mid-2015. Plosser has been advocating a quicker rate hike, perhaps even this year. He dissented from the Feds latest policy statement, saying the central bank should remove its pledge to keep rates close to zero for a considerable time after it completes bond purchases. Plosser said the longer the Fed waits, the more likely it is that the central bank will have to raise rates sharply. The Fed might have to race to catch up with inflation, he said. San Francisco Fed President Williams believes the central bank will begin hiking rates in the summer of 2015, current economic conditions continue to warrant low-rate policies, though labor market conditions are improving. Fed Chair Yellen will give her latest views on the health of the labor market later today. In previous speeches, Yellen has laid out a dashboard of indicators, including wages and the number of people working part time who want to work full-time, to gauge the health of the labor market. Economists expect Yellen to note that several indicators of labor market strength, including the unemployment rate are getting better, but stick to her guns that the central bank can be patient before moving to hike interest rates. The Dollar Index, which tracks the performance of the U.S Dollar versus a basket of six other major currencies, was down 0.122% at 82.15
Posted on: Fri, 22 Aug 2014 12:04:22 +0000
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