Ringgit extends gains to end higher against US dollar

Gwen Vasquez
July 14, 2017

Yellen said on Wednesday the USA economy is healthy enough for the Fed to raise rates, though low inflation and a low neutral rate may leave the central bank with diminished leeway. Additionally, strong trade data out of China boosted the Australian dollar against its U.S. counterpart. New Zealand's median house price rose an annual 5.8 percent in June with strong growth outside of Auckland, according to the Real Estate Institute.

Although the Fed plans to keep raising interest rates, Yellen gave no information on a timetable.

"The market did perceive a greater degree of anxiety over inflation - at the margin", said Westpac's USA economist, Elliot Clarke.

In her second straight day of Capitol Hill testimony, she walked back her statement last month that she didn't expect another financial crisis "in our lifetimes".

"The testimony by Fed Chair Janet Yellen before Congress could represent the main catalyst for markets this week, although we do not think the Dollars will react much, as we do not expect her to deviate from her recent rhetoric..." The Canadian dollar was last trading at C$1.2720 to the greenback, up 0.22 percent. "Traders were surprised to hear Yellen refer to the uncertainty caused by the slow inflation growth in the United States and took her comments as a signal that the next rate hike is still on the table but probably not until September".

Noting the tightness of the labor market, Yellen said the USA may start to see higher wages and prices as economic slack shrinks and called the risks to inflation "two-sided", which explained why policy makers "have felt that it probably remains prudent to remain on a gradual path of rate increases".

More news: 'Crystal Palace heeft beste papieren voor Riedewald'

The Fed increased the interest rate for federal funds rate by 0.25 of a percentage point at its March and June meetings, bringing the target to a range of 1 to 1.25 percent.

Oil futures traders reacted positive to her comments as well as downward revision of forecasts for dwindling production from US shale. The S&P 500 and Nasdaq ended up 0.2% each. The retailer raised its second-quarter forecasts and said sales and customer traffic increased.

In late trading, the 10-year Treasury yield was at 2.346 percent, up from 2.327 percent late Wednesday.

Benchmark U.S. crude gained 59 cents, or 1.3 percent, to settle at $46.08 per barrel on the New York Mercantile Exchange. Natural gas fell 2 cents to $2.96 per 1,000 cubic feet. South Korea's Kospi gained 0.7 percent to 2,409.49. Brent crude, used to price worldwide oils, fell 30 cents to $47.44 per barrel.

Major stock indexes in Europe closed mostly higher.

Hong Kong jumped 1.2 percent to its highest level since mid-2015 and Sydney climbed 1.1 percent.

Other reports by LeisureTravelAid

Discuss This Article