Dollar continues recovery from three-year lows

Dollar continues recovery from three-year lows

Analysts said they expected gold to remain rangebound, citing Wednesday's release of the latest Federal Reserve minutes which showed USA central bank policy makers remained anxious about inflation and committed to hiking interest rates.

Fed officials saw stronger USA growth sustaining additional interest-rate increases, minutes of their January policy meeting released on Wednesday showed.

Yesterday's FOMC meeting minutes suggested the US central bank would raise interest rates more aggressively in 2018.

The minutes pointed to a strong economy, but also the "increased likelihood" of more rate hikes ahead.

The minutes' language spooked markets again, as Wall Street, which was in positive territory most of the day, tumbled after the report was released.

The US central bank said the US expansion was to gain further momentum - with several Fed staff raising their growth forecasts - thanks to a global economic recovery and an expected boost from US tax cuts. The price action in Fed Funds futures also indicated that three rate hikes are now nearly fully priced in for this year, compared to two as recently as December.

However, a number of members said the continued strength in hiring "was likely to translate into faster wage increases at some point".

On oil markets both main contracts edged down yesterday after a recent series of gains as the dollar edges higher, while analysts say the output cap led by OPEC and Russian Federation is helping to mop up the global glut that hammered prices in previous years.

Some of the US government's short-term borrowing costs rose to their highest level in more than nine years on Tuesday as Treasury raised $179 billion in the bond market to fund spending and make debt payments.

Japan's core consumer inflation was steady in January from a year earlier in a sign a strengthening economy has yet to prompt companies to raise prices, a challenge policy makers have yet to overcome despite years of massive stimulus.

Spot gold touched a one-week low of $1,329.42 an ounce, having declined 1.4 percent so far this week. While investors seem to have adjusted to 10-year rates at a four-year high for now, the deluge of supply could push yields higher, weakening the case for owning stocks at elevated valuations.

France's private sector expanded at the slowest pace in four months in February, flash survey data from IHS Markit showed Wednesday. The Dow slid 166.97 points or 0.7 percent to 24,797.78, the Nasdaq dipped 16.08 points or 0.2 percent to 7,218.23 and the S&P 500 fell 14.93 points or 0.6 percent to 2,701.33.

The Federal Open Market Committee chose not to raise its benchmark interest rate January 31, keeping the rate between 1.25 percent and 1.5 percent.

Think of how this might impact the financing of new Treasury issues, especially with the expectation that the federal deficits will contribute at least $1.5 trillion more debt to the market place in coming years.

-The Nasdaq Composite index added 0.2 percent. Nonetheless, this was the third consecutive increase in activity and bigger than the expected 0.4% rise.



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