Dol­lar ex­tends on po­ten­tial rate hike

The Myanmar Times - - International Business -

THE dol­lar added to its gains yes­ter­day af­ter Fed­eral Re­serve boss Janet Yellen sug­gested an in­ter­est rate hike this year was still on the ta­ble.

In a speech on Au­gust 26 at the an­nual Jack­son Hole sym­po­sium of cen­tral bankers, Ms Yellen said that the case for a US rate hike had “strength­ened”, sharply boost­ing the green­back.

But she did not give a clear sig­nal on the tim­ing of a pos­si­ble in­crease, leav­ing mar­kets in limbo again over when the US cen­tral bank would move, an­a­lysts said.

Deal­ers are now await­ing non-farm pay­rolls data this week, with a strong read­ing ex­pected to bol­ster the case that the world’s top econ­omy could with­stand a rise in bor­row­ing costs, pos­si­bly this year.

“Af­ter a week of guess­ing, Yellen left lit­tle to the imag­i­na­tion when she stated that the case of a Fed rate hike had strength­ened, but re­mained very much data de­pen­dent,” said Stephen Innes, se­nior trader at forex firm OANDA Asia Pa­cific.

“Given the prox­im­ity of the grand­daddy of all Fed data, the non-farm pay­rolls, it is without ques­tion that this week’s print will take on more im­por­tance than usual.”

The dol­lar climbed to 102.16 yen in Tokyo yes­ter­day from 101.77 yen in New York.

The US unit jumped 0.9 per­cent against the South Korean won and 0.7pc against Malaysia’s ring­git, while it also rose on the Taiwan and Sin­ga­pore dol­lars, the Philip­pine peso, and the In­done­sian ru­piah.

Bank of Japan gov­er­nor Haruhiko Kuroda told the Jack­son Hole sym­po­sium that there was no doubt the cen­tral bank had “am­ple space” for tak­ing ad­di­tional eas­ing mea­sures.

The BoJ, which holds its next meet­ing in late Septem­ber, has been un­der in­creas­ing pres­sure to un­leash fresh mea­sures to counter a down­turn in the world’s num­ber three econ­omy.

“De­spite this rhetoric, Kuroda will need to con­tend with the grow­ing num­ber of Bank of Japan of­fi­cials who are gravely con­cerned at the un­der­ly­ing in­ef­fec­tive­ness of this mas­sive pol­icy spend,” said OANDA’s Mr Innes.

The cen­tral bank’s huge mon­e­tary eas­ing pol­icy is a corner­stone of Prime Min­is­ter Shinzo Abe’s bid to kick­start lack­lus­tre growth.

But more than three years on, the pol­icy blitz ap­pears to have had lit­tle last­ing im­pact with the econ­omy stalling in the sec­ond quar­ter. –

‘This week’s print will take on more im­por­tance than usual.’ Stephen Innes OANDA Asia Pa­cific

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