Gold&nbsp;prices remained&nbsp;locked&nbsp;just&nbsp;below&nbsp;$1,300 an ounce on Tuesday as investors waited for clues on the pace of US&nbsp;interest rate rises from a&nbsp;Federal Reserve&nbsp;meeting this week.

A&nbsp;Fed&nbsp;statement and press conference expected from 1800 GMT on Wednesday could push&nbsp;gold out of the tight range of around $1,290-$1,305 in which it has been trapped since mid-May.

Gold&nbsp;is highly sensitive to interest rates because higher rates push up bond yields, making non-yielding&nbsp;gold&nbsp;less attractive, and tend to strengthen the dollar, increasing the cost of&nbsp;gold&nbsp;for buyers using other currencies.

Investors expect the&nbsp;Fed&nbsp;to increase rates on Wednesday but will be looking for hints at future policy. A more aggressive stance on monetary tightening would hurt&nbsp;gold.

"We are waiting for the FOMC," said Saxo Bank analyst Ole Hansen, referring to the&nbsp;Fed's policy committee.

Gold&nbsp;prices have tended to fall ahead of previous rate rises but recover afterwards, he said. "We're still erring towards the potential for a move higher here."

Spot&nbsp;gold&nbsp;was down 0.1 per cent at $1,298.15 an ounce at 1021 GMT, while US gold&nbsp;futures for August delivery were 0.1 per cent lower at $1,302 an ounce.

The dollar and US&nbsp;bond yields were also largely flat.

Adding to the wait-and-see mood for&nbsp;gold&nbsp;were expectations that the European Central Bank will signal a winding down of its vast bond-buying programme at a&nbsp;meeting&nbsp;on Thursday. This would likely help&nbsp;gold&nbsp;by boosting the euro and weakening the dollar.

Japan's central bank will also meet on June 14-15.

Gold&nbsp;did not react strongly to a pledge by the leaders of the United States and North Korea to work toward complete denuclearisation of the Korean peninsula.

The joint statement signed at the end of a summit in Singapore gave few details on how this goal would be achieved.

Gold&nbsp;is traditionally used as a safe place to invest money during times of uncertainty, and growing tensions over Korea have added to demand.

In other precious metals, silver was down 0.2 per cent at $16.86 an ounce after hitting a seven-week high of $16.95 on Monday.

Platinum was 0.2 per cent higher at $905.80 an ounce and palladium was down 0.3 per cent at $1,019 an ounce.

A Fed statement and press conference expected from 1800 GMT on Wednesday could push gold out of the tight range of around $1,290-$1,305 in which it has been trapped since mid-May

Gold prices remained locked just below $1,300 an ounce on Tuesday as investors waited for clues on the pace of US interest rate rises from a Federal Reserve meeting this week. A Fed statement and press conference expected from 1800 GMT on Wednesday could push gold out of the tight range of around $1,290-$1,305 in which it has been trapped since mid-May. Gold is highly sensitive to interest rates because higher rates push up bond yields, making non-yielding gold less attractive, and tend to strengthen the dollar, increasing the cost of gold for buyers using other currencies. Investors expect the Fed to increase rates on Wednesday but will be looking for hints at future policy. A more aggressive stance on monetary tightening would hurt gold. "We are waiting for the FOMC," said Saxo Bank analyst Ole Hansen, referring to the Fed's policy committee. Gold prices have tended to fall ahead of previous rate rises but recover afterwards, he said. "We're still erring towards the potential for a move higher here." Spot gold was down 0.1 per cent at $1,298.15 an ounce at 1021 GMT, while US gold futures for August delivery were 0.1 per cent lower at $1,302 an ounce. The dollar and US bond yields were also largely flat. Adding to the wait-and-see mood for gold were expectations that the European Central Bank will signal a winding down of its vast bond-buying programme at a meeting on Thursday. This would likely help gold by boosting the euro and weakening the dollar. Japan's central bank will also meet on June 14-15. Gold did not react strongly to a pledge by the leaders of the United States and North Korea to work toward complete denuclearisation of the Korean peninsula. The joint statement signed at the end of a summit in Singapore gave few details on how this goal would be achieved. Gold is traditionally used as a safe place to invest money during times of uncertainty, and growing tensions over Korea have added to demand. In other precious metals, silver was down 0.2 per cent at $16.86 an ounce after hitting a seven-week high of $16.95 on Monday. Platinum was 0.2 per cent higher at $905.80 an ounce and palladium was down 0.3 per cent at $1,019 an ounce.

Gold locked below $1,300 as market braces for Federal Reserve meeting

As the gap between short- and long-term borrowing costs hovers near its lowest in more than 10 years, speculation has risen over whether the so-called yield curve is signalling that a recession could be around the corner. Not to worry, two influential Federal Reserve policymakers said on Friday.&nbsp;

Another, whose views are typically outside the mainstream at the Fed, disagreed. Growth prospects look pretty strong, which is why the Fed is raising short-term interest rates, the two sanguine policymakers explained. Those rate hikes, they said, are in and of themselves acting to flatten the yield curve.

In addition, they argued, the curve will likely steepen as the US government runs a bigger deficit and issues more debt, they said.&nbsp;

<img alt="recession.png" data-entity-type="" data-entity-uuid="" height="493" src="http://images.wionews.com/iniline-images/recession.png" width="752" />

The calming comments, from the New York Fed’s incoming chief John Williams and from Chicago Fed President Charles Evans in back-to-back but separate appearances, appeared calculated to allay concern about a potential slowdown ahead.

“The yield curve is not nearly as much of a concern as I might have pointed to a couple months ago,” Evans said in Chicago after a speech, in response to a reporter’s question.

Williams, who will leave his current job as San Francisco Fed president in June to take over at the New York Fed, also said he expects the Fed’s shrinking balance sheet will help steepen the curve by putting upward pressure on longer-term rates. In January the U.S. Congress passed a budget deal that boosts U.S. government spending, following a December tax package that slashes corporate tax rates. Both changes are expected to lead to an increase in government borrowing in coming years.

The Fed policymakers reason that a bigger supply of debt should put downward pressure on Treasury prices and deliver a corresponding lift to yields. “We’ve got more fiscal debt in train in the U.S. That has to be funded,” and will likely push up long rates and steepen the yield curve, Evans said. At their March meeting, Fed officials “generally agreed that the current degree of flatness of the yield curve was not unusual by historical standards,” according to the meeting minutes.

Since then, longer rates have come closer to being overtaken by short rates, a phenomenon is known as yield curve inversion, which has been a reliable precursor of past recessions. Still, there is the debate within the Fed over whether a flat yield curve is a problem. &nbsp;Dallas Fed President Robert Kaplan earlier this week said that while the Fed has the flexibility to raise rates now, the 10-year yield imposes limits on how far it can do so. The 10-year yield on Friday was at 2.96 percent, the highest in more than four years.

Minneapolis Fed President Neel Kashkari, who consistently voted against rate hikes last year, said in a CNBC interview on Friday that the flattening curve was “a yellow light flashing,” a warning that the Fed should soon stop raising rates or risk breaking the economy too quickly and plunging the country into recession. Evans, who joined Kashkari in dissenting last December but who earlier this month has sounded more supportive of gradual rate hikes as the economy strengthens, isn’t buying it.

“Any concerns that we may have expressed before about an overly flat yield curve, I’d put off to the side until we see things play out.”

<img alt="Federal policy vs the yield curve_0.png" data-entity-type="" data-entity-uuid="" height="493" src="http://images.wionews.com/iniline-images/Federal%20policy%20vs%20the%20yield%20curve_0.png" width="757" />

The Federal policymakers reason that a bigger supply of debt should put downward pressure on Treasury prices and deliver a corresponding lift to yields.

As the gap between short- and long-term borrowing costs hovers near its lowest in more than 10 years, speculation has risen over whether the so-called yield curve is signalling that a recession could be around the corner. Not to worry, two influential Federal Reserve policymakers said on Friday. Another, whose views are typically outside the mainstream at the Fed, disagreed. Growth prospects look pretty strong, which is why the Fed is raising short-term interest rates, the two sanguine policymakers explained. Those rate hikes, they said, are in and of themselves acting to flatten the yield curve. In addition, they argued, the curve will likely steepen as the US government runs a bigger deficit and issues more debt, they said. The calming comments, from the New York Fed’s incoming chief John Williams and from Chicago Fed President Charles Evans in back-to-back but separate appearances, appeared calculated to allay concern about a potential slowdown ahead. “The yield curve is not nearly as much of a concern as I might have pointed to a couple months ago,” Evans said in Chicago after a speech, in response to a reporter’s question. Williams, who will leave his current job as San Francisco Fed president in June to take over at the New York Fed, also said he expects the Fed’s shrinking balance sheet will help steepen the curve by putting upward pressure on longer-term rates. In January the U.S. Congress passed a budget deal that boosts U.S. government spending, following a December tax package that slashes corporate tax rates. Both changes are expected to lead to an increase in government borrowing in coming years. The Fed policymakers reason that a bigger supply of debt should put downward pressure on Treasury prices and deliver a corresponding lift to yields. “We’ve got more fiscal debt in train in the U.S. That has to be funded,” and will likely push up long rates and steepen the yield curve, Evans said. At their March meeting, Fed officials “generally agreed that the current degree of flatness of the yield curve was not unusual by historical standards,” according to the meeting minutes. Since then, longer rates have come closer to being overtaken by short rates, a phenomenon is known as yield curve inversion, which has been a reliable precursor of past recessions. Still, there is the debate within the Fed over whether a flat yield curve is a problem. Dallas Fed President Robert Kaplan earlier this week said that while the Fed has the flexibility to raise rates now, the 10-year yield imposes limits on how far it can do so. The 10-year yield on Friday was at 2.96 percent, the highest in more than four years. Minneapolis Fed President Neel Kashkari, who consistently voted against rate hikes last year, said in a CNBC interview on Friday that the flattening curve was “a yellow light flashing,” a warning that the Fed should soon stop raising rates or risk breaking the economy too quickly and plunging the country into recession. Evans, who joined Kashkari in dissenting last December but who earlier this month has sounded more supportive of gradual rate hikes as the economy strengthens, isn’t buying it. “Any concerns that we may have expressed before about an overly flat yield curve, I’d put off to the side until we see things play out.”

US recession ahead? Federal policymakers say not to worry

US job creation accelerated in January, as labor markets continued to absorb workers at a robust pace, unemployment clung to a record low and wages moved higher, the government reported Friday.

The world&#39;s largest economy added 200,000 net new positions in the month, more than expected, driven by gains in construction, retail, restaurants and health care, the Labour Department reported.

The result beat forecasts, which predicted an increase of 180,000, and helped offset December&#39;s disappointing result.

Meanwhile, the unemployment rate remained at 4.1 percent for the fourth month in a row.

Hourly wages continued to rise for the month as labour markets remained tight -- with wages posting their largest 12-month increase in more than nine years. &nbsp;

That will strengthen the case for the Federal Reserve to raise the benchmark interest rate in March, as it is widely expected to do.

Hourly wages rose 0.3 percent from the prior month to $26.74, putting worker pay up 2.9 percent compared to January of last year, the largest 12-month gain since June 2009.

Over the same period, the consumer price index gained 2.1 percent, seasonally adjusted, but rising wages would be expected to put more pressure on prices.

The solid job gains were sure to be a relief for an embattled White House, as President Donald Trump has taken credit for the extended run of good economic news amid political turmoil.

Hiring by speciality trade contractors drove job creation in the construction sector, which added 36,000 new positions, while restaurants and bars added 31,000 new jobs.

The ranks of health care workers swelled for the month as well, adding 21,000 new positions.

Revisions to November and December subtracted a net 24,000 positions, bringing average job creation over the last three months of the year to 192,000, beating the 2017 monthly average of 181,000.

With the 4.1 percent unemployment rate, a 17-year-low, the ranks of the long-term unemployed -- those looking for work for 27 weeks or longer -- continued to drop, falling six percent to 1.4 million.

However, the unemployment rate for African-Americans, which Trump hailed this week in his State of the Union address, rose nine-tenths of a percentage point to 7.7 percent, just below the 7.8 percent in January last year.

Trump took office a year ago, pledging to create 25 million new jobs over a decade or just over 200,000 per month.

However, Labor Department figures released Friday show the economy added 2.17 million jobs in 2017, fewer than 2016 when there were 2.34 million new jobs.

The world's largest economy added 200,000 net new positions in the month, more than expected, driven by gains in construction, retail, restaurants and health care, the Labour Department reported

US job creation accelerated in January, as labor markets continued to absorb workers at a robust pace, unemployment clung to a record low and wages moved higher, the government reported Friday. The world's largest economy added 200,000 net new positions in the month, more than expected, driven by gains in construction, retail, restaurants and health care, the Labour Department reported. The result beat forecasts, which predicted an increase of 180,000, and helped offset December's disappointing result. Meanwhile, the unemployment rate remained at 4.1 percent for the fourth month in a row. Hourly wages continued to rise for the month as labour markets remained tight -- with wages posting their largest 12-month increase in more than nine years. That will strengthen the case for the Federal Reserve to raise the benchmark interest rate in March, as it is widely expected to do. Hourly wages rose 0.3 percent from the prior month to $26.74, putting worker pay up 2.9 percent compared to January of last year, the largest 12-month gain since June 2009. Over the same period, the consumer price index gained 2.1 percent, seasonally adjusted, but rising wages would be expected to put more pressure on prices. The solid job gains were sure to be a relief for an embattled White House, as President Donald Trump has taken credit for the extended run of good economic news amid political turmoil. Hiring by speciality trade contractors drove job creation in the construction sector, which added 36,000 new positions, while restaurants and bars added 31,000 new jobs. The ranks of health care workers swelled for the month as well, adding 21,000 new positions. Revisions to November and December subtracted a net 24,000 positions, bringing average job creation over the last three months of the year to 192,000, beating the 2017 monthly average of 181,000. With the 4.1 percent unemployment rate, a 17-year-low, the ranks of the long-term unemployed -- those looking for work for 27 weeks or longer -- continued to drop, falling six percent to 1.4 million. However, the unemployment rate for African-Americans, which Trump hailed this week in his State of the Union address, rose nine-tenths of a percentage point to 7.7 percent, just below the 7.8 percent in January last year. Trump took office a year ago, pledging to create 25 million new jobs over a decade or just over 200,000 per month. However, Labor Department figures released Friday show the economy added 2.17 million jobs in 2017, fewer than 2016 when there were 2.34 million new jobs.

US adds 200,000 new jobs in January

US President Donald Trump is expected on Thursday to nominate Jerome Powell as the next head of the Federal Reserve, putting his own stamp on the leadership of the US&nbsp;central bank while signaling continuity on monetary policy.

Trump&#39;s decision, scheduled for Thursday afternoon, concludes a months-long process in which he considered five finalists, including current Fed Chair Janet Yellen, before settling on Powell who has served as a Fed governor since 2012.

Powell&#39;s name has been circulated as the top contender for over a week.

A source with knowledge of the process said no surprises were expected on Thursday, despite Trump&#39;s reputation for weighing decisions up to the last minute and his praise on Wednesday of Yellen, who was nominated by Democratic President Barack Obama. Her term as Fed chair expires in February 2018 though she is entitled to remain a Fed board governor until 2024.

&quot;I think Janet Yellen is excellent,&quot; Trump told reporters during a meeting with his cabinet after declaring his intention to announce his choice the next day.

Asked if she was his pick, Trump said: &quot;I didn&#39;t say that.&quot;

He predicted people would be &quot;extremely impressed&quot; with the nominee, who will require Senate confirmation.

Powell, 64, has supported Yellen&#39;s general direction in setting monetary policy, and in recent years has shared her concerns that low inflation justified continuing with a cautious approach to raising interest rates.

Commerzbank economist Bernd Weidensteiner said a Powell pick would mean Trump had chosen the &quot;least controversial&quot; person for the job. &quot;Under his chairmanship markets would expect business as usual&nbsp;which they obviously like,&quot; he said.

The president has mulled his choices for Fed chair, a decision that is normally cloaked in secrecy, in an unusually public way, asking lawmakers and even a television news anchor to weigh in on whom they would pick.

Trump also considered Stanford University economist John Taylor, former Fed Governor Kevin Warsh, and White House economic adviser Gary Cohn.

Taylor and Warsh were both viewed as people who might raise interest rates at a faster pace than Yellen and Powell. Cohn appeared to fall out of favor after criticizing Trump&#39;s reaction to the violence in Charlottesville, Virginia, earlier this year.

Financial markets look set to greet Powell&#39;s appointment with a shrug. Investors are pricing in an interest rate rise in December and the Fed&#39;s current projections are for three more rate rises next year.

Powell is expected to pursue a policy of cautious deregulation of the financial sector, potentially freeing smaller banks from some of the rules imposed in the wake of the 2007-2008 financial crisis.

Powell, who has been a Federal Reserve board governor since 2012, played a key role in drafting new bank regulations after the crisis and will likely offer more continuity for Wall Street than other candidates, analysts said.

Jerome Powell's name has been circulated as the top contender for over a week.

US President Donald Trump is expected on Thursday to nominate Jerome Powell as the next head of the Federal Reserve, putting his own stamp on the leadership of the US central bank while signaling continuity on monetary policy. Trump's decision, scheduled for Thursday afternoon, concludes a months-long process in which he considered five finalists, including current Fed Chair Janet Yellen, before settling on Powell who has served as a Fed governor since 2012. Powell's name has been circulated as the top contender for over a week. A source with knowledge of the process said no surprises were expected on Thursday, despite Trump's reputation for weighing decisions up to the last minute and his praise on Wednesday of Yellen, who was nominated by Democratic President Barack Obama. Her term as Fed chair expires in February 2018 though she is entitled to remain a Fed board governor until 2024. "I think Janet Yellen is excellent," Trump told reporters during a meeting with his cabinet after declaring his intention to announce his choice the next day. Asked if she was his pick, Trump said: "I didn't say that." He predicted people would be "extremely impressed" with the nominee, who will require Senate confirmation. Powell, 64, has supported Yellen's general direction in setting monetary policy, and in recent years has shared her concerns that low inflation justified continuing with a cautious approach to raising interest rates. Commerzbank economist Bernd Weidensteiner said a Powell pick would mean Trump had chosen the "least controversial" person for the job. "Under his chairmanship markets would expect business as usual which they obviously like," he said. The president has mulled his choices for Fed chair, a decision that is normally cloaked in secrecy, in an unusually public way, asking lawmakers and even a television news anchor to weigh in on whom they would pick. Trump also considered Stanford University economist John Taylor, former Fed Governor Kevin Warsh, and White House economic adviser Gary Cohn. Taylor and Warsh were both viewed as people who might raise interest rates at a faster pace than Yellen and Powell. Cohn appeared to fall out of favor after criticizing Trump's reaction to the violence in Charlottesville, Virginia, earlier this year. Financial markets look set to greet Powell's appointment with a shrug. Investors are pricing in an interest rate rise in December and the Fed's current projections are for three more rate rises next year. Powell is expected to pursue a policy of cautious deregulation of the financial sector, potentially freeing smaller banks from some of the rules imposed in the wake of the 2007-2008 financial crisis. Powell, who has been a Federal Reserve board governor since 2012, played a key role in drafting new bank regulations after the crisis and will likely offer more continuity for Wall Street than other candidates, analysts said.

Donald Trump expected to name Jerome Powell as next head of Federal Reserve

US President Donald Trump is expected to announce his choice to lead the Federal Reserve on Thursday, a US official said Monday.

Trump said last week he had &#39;somebody very specific in mind. I think everybody will be very impressed.&#39;

He has not publicly ruled out re-nominating current Fed Chair Janet Yellen to a second four-year term, but US media have reported that Jerome Powell, a current Fed governor, is the likely candidate.

That would mark a change from tradition, as US presidents since the 1970s have always reappointed the central bank chief named by their predecessor as a signal of stability to markets.

But analysts say the decision puts Trump at cross purposes: Yellen has delivered a growing economy with low unemployment and low inflation but her vocal support for tough banking regulations runs counter to the White House position.

Trump has eagerly dismantled signature policies of the Obama administration, making Yellen, an Obama appointee, an enticing target.

Still, while two other known candidates, former Fed governor Kevin Warsh and Stanford Economist John Taylor, have support in some conservative circles, economists say in their hands US monetary policy would now be significantly tighter.

Trump has said he wanted &#39;to see rates stay low.&#39;

Current White House economic advisor Gary Cohn has also interviewed for the position but Trump may be reluctant to lose Cohn during what could be a hard-fought battle for sweeping tax cuts.

Trump also cooled on Cohn after the economist publicly criticized the president for his response to a deadly white nationalist rally in Charlottesville, Virginia in August.

Powell is the only holdover Republican currently sitting on the Federal Reserve Board and is seen a possible consensus candidate -- amenable to deregulation but unlikely to raise rates as quickly.

Trump said last week he had "somebody very specific in mind. I think everybody will be very impressed."

US President Donald Trump is expected to announce his choice to lead the Federal Reserve on Thursday, a US official said Monday. Trump said last week he had 'somebody very specific in mind. I think everybody will be very impressed.' He has not publicly ruled out re-nominating current Fed Chair Janet Yellen to a second four-year term, but US media have reported that Jerome Powell, a current Fed governor, is the likely candidate. That would mark a change from tradition, as US presidents since the 1970s have always reappointed the central bank chief named by their predecessor as a signal of stability to markets. But analysts say the decision puts Trump at cross purposes: Yellen has delivered a growing economy with low unemployment and low inflation but her vocal support for tough banking regulations runs counter to the White House position. Trump has eagerly dismantled signature policies of the Obama administration, making Yellen, an Obama appointee, an enticing target. Still, while two other known candidates, former Fed governor Kevin Warsh and Stanford Economist John Taylor, have support in some conservative circles, economists say in their hands US monetary policy would now be significantly tighter. Trump has said he wanted 'to see rates stay low.' Current White House economic advisor Gary Cohn has also interviewed for the position but Trump may be reluctant to lose Cohn during what could be a hard-fought battle for sweeping tax cuts. Trump also cooled on Cohn after the economist publicly criticized the president for his response to a deadly white nationalist rally in Charlottesville, Virginia in August. Powell is the only holdover Republican currently sitting on the Federal Reserve Board and is seen a possible consensus candidate -- amenable to deregulation but unlikely to raise rates as quickly.

Donald Trump to announce his choice to lead Federal reserve on Thursday

The 30-share BSE Sensex surged past the 32,000 mark for the first time closing at a record high of 32,037.&nbsp;

The broader 50-share Nifty also closed at a record high of 9,892.&nbsp;

The rally came on the back of retail inflation figures which hit a record low.&nbsp;

The retail inflation data, which came out on Wednesday, saw inflation dropping to a record low of 1.54 per cent. The lower inflation figures offer the Reserve Bank of India enough room for bringing the key interest rates down.

Asian and European indices were also trading higher on the back of Federal Reserve chair Janet Yellen testifying before the US Congress that the rate hike will be steady.

Foreign Portfolio Investors (FPI) took the opportunity to pour more money into the Indian equities.

Foreign portfolio investors (FPIs) bought shares worth a net Rs 361.25 crore yesterday, PTI reported.

The market rally was led primarily by banking and consumer goods stocks.

ITC was the top gainer among the pack surging 3.03 per cent. Other top gainers included Bharti Airtel, ICICI Bank and Sun Pharma.&nbsp;

The rally came on the back of lower inflation figures which were released on Wednesday offering RBI enough room to bring down interest rates

The 30-share BSE Sensex surged past the 32,000 mark for the first time closing at a record high of 32,037. The broader 50-share Nifty also closed at a record high of 9,892. The rally came on the back of retail inflation figures which hit a record low. The retail inflation data, which came out on Wednesday, saw inflation dropping to a record low of 1.54 per cent. The lower inflation figures offer the Reserve Bank of India enough room for bringing the key interest rates down. Asian and European indices were also trading higher on the back of Federal Reserve chair Janet Yellen testifying before the US Congress that the rate hike will be steady. Foreign Portfolio Investors (FPI) took the opportunity to pour more money into the Indian equities. Foreign portfolio investors (FPIs) bought shares worth a net Rs 361.25 crore yesterday, PTI reported. The market rally was led primarily by banking and consumer goods stocks. ITC was the top gainer among the pack surging 3.03 per cent. Other top gainers included Bharti Airtel, ICICI Bank and Sun Pharma.

Sensex closes at record high, crosses 32,000

The&nbsp;Federal Reserve raised interest rates on Wednesday for the second time in three months and said it would begin cutting its holdings of bonds and other securities this year, signalling its confidence in a growing US&nbsp;economy and strengthening job market.

In lifting its benchmark lending rate by a quarter percentage point to a target range of 1.00 per cent to 1.25 per cent and forecasting one more hike this year, the&nbsp;Fed&nbsp;seemed to largely brush off a recent run of mixed economic data.

The US&nbsp;central bank&#39;s rate-setting committee said the economy had continued to strengthen, job gains remained solid and indicated it viewed a recent softness in inflation as largely transitory.

The&nbsp;Fed&nbsp;also gave a first clear outline on its plan to reduce its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities, most of which were purchased in the wake of the 2007-2009 financial crisis and recession.

It expects to begin the normalization of its balance sheet this year, gradually ramping up the pace. The plan, which would feature halting reinvestments of ever-larger amounts of maturing securities, did not specify the overall size of the reduction.

&quot;What I can tell you is that we anticipate reducing reserve balances and our overall balance sheet to levels appreciably below those seen in recent years but larger than before the financial crisis,&quot;Fed&nbsp;Chair Janet Yellen said in a press conference following the release of the&nbsp;Fed&#39;s policy statement.

She added that the balance sheet normalization could be put into effect &quot;relatively soon.&quot;

The initial cap for the reduction of the&nbsp;Fed&#39;s Treasuries holdings would be set at $6 billion per month, increasing by $6 billion increments every three months over a 12-month period until it reached $30 billion per month.

For agency debt and mortgage-backed securities, the cap will be $4 billion per month initially, rising by $4 billion at quarterly intervals over a year until it reached $20 billion per month.

US&nbsp;stocks edged lower and prices of US&nbsp;Treasuries pared gains after the&nbsp;Fed&#39;s policy statement. The dollar &lt;.DXY&gt; was largely flat against a basket of currencies after reversing earlier losses, while the price of gold fell.

&quot;The&nbsp;Fed&nbsp;announcing an update to their reinvestment principles leaves September open (for) the start of balance sheet runoff, and the fact that they haven&#39;t slowed their projected path of rate hikes suggest they can do both balance sheet and rate hikes at the same time,&quot; said Gennadiy Goldberg, interest rate strategist at TD Securities.

Eyes on inflation

The&nbsp;Fed&nbsp;has now raised rates four times as part of a normalisation of monetary policy that began in December 2015. The central bank had pushed rates to near zero in response to the financial crisis.&nbsp;

Fed&nbsp;policymakers also released their latest set of quarterly economic forecasts, which showed only temporary concern about inflation and continued confidence about economic growth in the coming years.

They forecast US&nbsp;economic growth of 2.2 per&nbsp;cent in 2017, an increase from the previous projection in March. Inflation was expected to be at 1.7 per cent by the end of this year, down from the 1.9 per cent previously forecast.

A retreat in inflation over the past two months has caused jitters that the shortfall, if sustained, could alter the pace of future rate hikes. But the&nbsp;Fed&nbsp;maintained its forecast for three rate hikes next year.&nbsp;

The&nbsp;Fed&#39;s preferred measure of underlying inflation has retreated to 1.5 per cent, from 1.8 per cent earlier this year, and has run below the central bank&#39;s 2 per cent target for more than five years.

Earlier on Wednesday, the Labor Department reported consumer prices unexpectedly fell in May, the second drop in three months.

Yellen indicated the&nbsp;Fed&nbsp;still remained confident inflation would rise to its target over the medium term, bolstered by what she described as a robust labour market that is continuing to strengthen.

The&nbsp;Fed&#39;s estimates for the unemployment rate by the end of this year moved down to 4.3 per cent, the current level, and to 4.2 percent in 2018, indicating the&nbsp;Fed&nbsp;believes the labour market will continue to tighten.

The median estimate of the long-run neutral rate, which is seen as the level of monetary policy that neither boosts nor slows the economy, was unchanged at 3.0 per cent.

Minneapolis&nbsp;Fed&nbsp;President Neel Kashkari dissented in Wednesday&#39;s decision.

The?Fed?has now raised rates four times as part of a normalisation of monetary policy that began in December 2015. The central bank had pushed rates to near zero in response to the financial crisis

The Federal Reserve raised interest rates on Wednesday for the second time in three months and said it would begin cutting its holdings of bonds and other securities this year, signalling its confidence in a growing US economy and strengthening job market. In lifting its benchmark lending rate by a quarter percentage point to a target range of 1.00 per cent to 1.25 per cent and forecasting one more hike this year, the Fed seemed to largely brush off a recent run of mixed economic data. The US central bank's rate-setting committee said the economy had continued to strengthen, job gains remained solid and indicated it viewed a recent softness in inflation as largely transitory. The Fed also gave a first clear outline on its plan to reduce its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities, most of which were purchased in the wake of the 2007-2009 financial crisis and recession. It expects to begin the normalization of its balance sheet this year, gradually ramping up the pace. The plan, which would feature halting reinvestments of ever-larger amounts of maturing securities, did not specify the overall size of the reduction. "What I can tell you is that we anticipate reducing reserve balances and our overall balance sheet to levels appreciably below those seen in recent years but larger than before the financial crisis,"Fed Chair Janet Yellen said in a press conference following the release of the Fed's policy statement. She added that the balance sheet normalization could be put into effect "relatively soon." The initial cap for the reduction of the Fed's Treasuries holdings would be set at $6 billion per month, increasing by $6 billion increments every three months over a 12-month period until it reached $30 billion per month. For agency debt and mortgage-backed securities, the cap will be $4 billion per month initially, rising by $4 billion at quarterly intervals over a year until it reached $20 billion per month. US stocks edged lower and prices of US Treasuries pared gains after the Fed's policy statement. The dollar <.DXY> was largely flat against a basket of currencies after reversing earlier losses, while the price of gold fell. "The Fed announcing an update to their reinvestment principles leaves September open (for) the start of balance sheet runoff, and the fact that they haven't slowed their projected path of rate hikes suggest they can do both balance sheet and rate hikes at the same time," said Gennadiy Goldberg, interest rate strategist at TD Securities. Eyes on inflation The Fed has now raised rates four times as part of a normalisation of monetary policy that began in December 2015. The central bank had pushed rates to near zero in response to the financial crisis. Fed policymakers also released their latest set of quarterly economic forecasts, which showed only temporary concern about inflation and continued confidence about economic growth in the coming years. They forecast US economic growth of 2.2 per cent in 2017, an increase from the previous projection in March. Inflation was expected to be at 1.7 per cent by the end of this year, down from the 1.9 per cent previously forecast. A retreat in inflation over the past two months has caused jitters that the shortfall, if sustained, could alter the pace of future rate hikes. But the Fed maintained its forecast for three rate hikes next year. The Fed's preferred measure of underlying inflation has retreated to 1.5 per cent, from 1.8 per cent earlier this year, and has run below the central bank's 2 per cent target for more than five years. Earlier on Wednesday, the Labor Department reported consumer prices unexpectedly fell in May, the second drop in three months. Yellen indicated the Fed still remained confident inflation would rise to its target over the medium term, bolstered by what she described as a robust labour market that is continuing to strengthen. The Fed's estimates for the unemployment rate by the end of this year moved down to 4.3 per cent, the current level, and to 4.2 percent in 2018, indicating the Fed believes the labour market will continue to tighten. The median estimate of the long-run neutral rate, which is seen as the level of monetary policy that neither boosts nor slows the economy, was unchanged at 3.0 per cent. Minneapolis Fed President Neel Kashkari dissented in Wednesday's decision.

Fed raises rates, unveils balance sheet cuts in sign of confidence

Asia shares inched ahead while oil fell for a second session today, as investors awaited guidance on whether the Federal Reserve (Fed) will raise US interest rates this year. 
 
Morgan Stanley Capital International&#39;s (MSCI) broadest index of Asia-Pacific shares outside Japan added 0.3 per cent in slow trade. South Korea, Australia and Shanghai all gained. 
 
Japan&#39;s Nikkei went the other way and eased 0.2 per cent as the Yen held firm on the Dollar. 
 
A survey of Japanese manufacturing activity showed signs of steadying in August as output rose for the first time in six months, but had little impact on stocks. 
 
The IHS Markit/Nikkei Japan Flash PMI rose to 49.6 in August from a final 49.3 in July. More flash surveys are due from Europe and the United States later in the day. 
 
The whole world seems to have hushed ahead of comments from Fed Chair Janet Yellen at the central bank&#39;s annual meeting in Jackson Hole on Friday. Investors still doubt the stars will align for a hike anytime soon, so a hawkish tone from Yellen would challenge that equanimity. 
 
&quot;Ever so slowly, the market does seem to be reluctantly acknowledging the chorus of senior Fed speakers who have suggested recently that a 2016 rate hike is still quite probable and September is &#39;live&#39;,&quot; wrote analysts at ANZ in a note. 
 
&quot;But in reality, the response has been very muted.&quot; 
 
Indeed, US Treasuries actually rallied on Monday, with 10-year yields at 1.54 per cent after falling 4 basis points overnight. 
 
Fed fund futures imply around a 24 per cent chance of an easing in September, rising to around 50 per cent by December. 
 
A quarter-point hike is not fully priced until September 2017. 
 
Oil gives ground 
 
In commodity markets, oil remained under pressure after shedding 3 per cent on Monday. 
 
Prices retreated from two-month highs on worries about burgeoning Chinese fuel exports, more Iraqi and Nigerian crude shipments and a rising US oil rig count. 
 
Brent crude lost 53 Cents to $48.63 a barrel. It hit a two-month high of $51.22 on Friday. US crude futures fell 66 Cents to $46.75, after the September contract expired on Monday at $47.05. 
 
On Wall Street, the Dow jones Industrial Average (Dow) had ended Monday down 0.12 per cent, while the Standard and Poor&#39;s (S&amp;P) 500 lost 0.06 per cent and the National Association of Securities Dealers Automated Quotations (Nasdaq) added 0.12 per cent. 
 
Biotech stocks received a boost from Pfizer&#39;s $14 billion acquisition of cancer drug maker Medivation, which jumped nearly 20 per cent. 
 
Of the 479 companies in the S&amp;P 500 that have reported earnings, 71 per cent have topped expectations, according to Thomson Reuters data. Earnings are currently showing a decline of 2.3 per cent for the quarter. 
 
In forex markets, the Dollar slipped a touch to 94.466 against a basket of currencies. The index fell about 1.3 per cent last week on what traders perceived as mixed signals from Fed officials. 
 
The Dollar drifted as low as 100.03 Yen in early trade but found enough support to clamber back to 100.27. The Euro was a shade firmer at $1.1332. 
 
The New Zealand Dollar blipped higher after the country&#39;s central bank forecast another 35 basis points in possible rate cuts, less than many investors had wagered on. 
 
The kiwi Dollar rose around a third of a Cent to $0.7310 in reaction. 
 
(Reuters)

Investors await guidance on whether the Federal Reserve will raise US interest rates this year

Asia shares inched ahead while oil fell for a second session today, as investors awaited guidance on whether the Federal Reserve (Fed) will raise US interest rates this year. Morgan Stanley Capital International's (MSCI) broadest index of Asia-Pacific shares outside Japan added 0.3 per cent in slow trade. South Korea, Australia and Shanghai all gained. Japan's Nikkei went the other way and eased 0.2 per cent as the Yen held firm on the Dollar. A survey of Japanese manufacturing activity showed signs of steadying in August as output rose for the first time in six months, but had little impact on stocks. The IHS Markit/Nikkei Japan Flash PMI rose to 49.6 in August from a final 49.3 in July. More flash surveys are due from Europe and the United States later in the day. The whole world seems to have hushed ahead of comments from Fed Chair Janet Yellen at the central bank's annual meeting in Jackson Hole on Friday. Investors still doubt the stars will align for a hike anytime soon, so a hawkish tone from Yellen would challenge that equanimity. "Ever so slowly, the market does seem to be reluctantly acknowledging the chorus of senior Fed speakers who have suggested recently that a 2016 rate hike is still quite probable and September is 'live'," wrote analysts at ANZ in a note. "But in reality, the response has been very muted." Indeed, US Treasuries actually rallied on Monday, with 10-year yields at 1.54 per cent after falling 4 basis points overnight. Fed fund futures imply around a 24 per cent chance of an easing in September, rising to around 50 per cent by December. A quarter-point hike is not fully priced until September 2017. Oil gives ground In commodity markets, oil remained under pressure after shedding 3 per cent on Monday. Prices retreated from two-month highs on worries about burgeoning Chinese fuel exports, more Iraqi and Nigerian crude shipments and a rising US oil rig count. Brent crude lost 53 Cents to $48.63 a barrel. It hit a two-month high of $51.22 on Friday. US crude futures fell 66 Cents to $46.75, after the September contract expired on Monday at $47.05. On Wall Street, the Dow jones Industrial Average (Dow) had ended Monday down 0.12 per cent, while the Standard and Poor's (S&P) 500 lost 0.06 per cent and the National Association of Securities Dealers Automated Quotations (Nasdaq) added 0.12 per cent. Biotech stocks received a boost from Pfizer's $14 billion acquisition of cancer drug maker Medivation, which jumped nearly 20 per cent. Of the 479 companies in the S&P 500 that have reported earnings, 71 per cent have topped expectations, according to Thomson Reuters data. Earnings are currently showing a decline of 2.3 per cent for the quarter. In forex markets, the Dollar slipped a touch to 94.466 against a basket of currencies. The index fell about 1.3 per cent last week on what traders perceived as mixed signals from Fed officials. The Dollar drifted as low as 100.03 Yen in early trade but found enough support to clamber back to 100.27. The Euro was a shade firmer at $1.1332. The New Zealand Dollar blipped higher after the country's central bank forecast another 35 basis points in possible rate cuts, less than many investors had wagered on. The kiwi Dollar rose around a third of a Cent to $0.7310 in reaction. (Reuters)

Asia shares inch ahead, oil falls

Asian shares slipped on Monday and the dollar pulled away from last week&#39;s lows on expectations that a signal might emerge from a Federal Reserve gathering this week in Jackson Hole, Wyoming that the US central bank is gearing up to hike interest rates. 
 
Global central bankers will join the annual mountain retreat that opens on Thursday, with Fed Chair Janet Yellen due to speak the following day. 
 
On Sunday, Fed Vice Chairman Stanley Fischer gave a generally upbeat assessment of the US economy&#39;s current strength in prepared remarks, saying the job market was close to full strength and still improving. 
 
&quot;We are close to our targets,&quot; Fischer said, though he did not directly address the timing of when the US central bank should next raise interest rates. 
 
Last week, New York Fed President William Dudley said a rate hike would be possible in September. Fischer&#39;s remarks fuelled that sense of anticipation, though interest rate futures contracts indicate that market is pricing in about 50/50 odds of an increase in December. 
 
&quot;Fischer&#39;s comments have raised some expectations in the market, particularly after Dudley&#39;s recent comments,&quot; said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank. 
 
MSCI&#39;s broadest index of Asia-Pacific shares outside Japan was down 0.7 per cent, after losing 0.3 per cent last week. Wall Street logged modest losses on Friday, ending nearly flat for the week. 
 
Japan&#39;s Nikkei rose 0.3 per cent, taking solace from a weaker currency ahead of the Jackson Hole meeting. It had skidded 2.2 percent last week, as the dollar dipped below 100 yen. 
 
&quot;Moves in the Japanese market will likely be dominated by the dollar-yen performances after the meeting,&quot; said Masashi Oda, general manager of the strategic investment department at Sumitomo Mitsui Trust Asset Management. &quot;The market could move either way, but most people want some kind of signal at this point.&quot; 
 
The dollar was up 0.6 percent against its Japanese counterpart at 100.84 yen, while the euro was down 0.4 percent at $1.1276, pulling away from last week&#39;s eight-week high of $1.1366. 
 
The dollar index, which tracks the greenback against a basket of six major rivals, added 0.4 per cent to 94.923, pulling away from last week&#39;s low of 94.077, which was its lowest since June 24. 
 
Crude oil futures dropped, giving back some of their recent gains that propelled oil into bull market territory, after technicals had it in a bear market earlier this month. 
 
Crude futures have risen almost $10 a barrel since early August on speculation that Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries will agree next month to a production freeze deal with non-OPEC producers led by Russia. 
 
US crude fell 0.9 percent to $48.09 after gaining 9 per cent last week, rising for a second straight week. Brent crude was 1.3 per cent lower at $50.20 a barrel, after gaining 8 per cent last week, rising for a third week in a row. 
 
Gold fell on Monday to its lowest in over a week as the dollar strengthened. Spot gold was down 0.5 percent at $1,334.01 an ounce.

(Reuters) 
 
&nbsp;

Fed Vice Chairman Stanley Fischer gave an upbeat assessment of the US economy's current strength, saying the job market was close to full strength and still improving

Asian shares slipped on Monday and the dollar pulled away from last week's lows on expectations that a signal might emerge from a Federal Reserve gathering this week in Jackson Hole, Wyoming that the US central bank is gearing up to hike interest rates. Global central bankers will join the annual mountain retreat that opens on Thursday, with Fed Chair Janet Yellen due to speak the following day. On Sunday, Fed Vice Chairman Stanley Fischer gave a generally upbeat assessment of the US economy's current strength in prepared remarks, saying the job market was close to full strength and still improving. "We are close to our targets," Fischer said, though he did not directly address the timing of when the US central bank should next raise interest rates. Last week, New York Fed President William Dudley said a rate hike would be possible in September. Fischer's remarks fuelled that sense of anticipation, though interest rate futures contracts indicate that market is pricing in about 50/50 odds of an increase in December. "Fischer's comments have raised some expectations in the market, particularly after Dudley's recent comments," said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.7 per cent, after losing 0.3 per cent last week. Wall Street logged modest losses on Friday, ending nearly flat for the week. Japan's Nikkei rose 0.3 per cent, taking solace from a weaker currency ahead of the Jackson Hole meeting. It had skidded 2.2 percent last week, as the dollar dipped below 100 yen. "Moves in the Japanese market will likely be dominated by the dollar-yen performances after the meeting," said Masashi Oda, general manager of the strategic investment department at Sumitomo Mitsui Trust Asset Management. "The market could move either way, but most people want some kind of signal at this point." The dollar was up 0.6 percent against its Japanese counterpart at 100.84 yen, while the euro was down 0.4 percent at $1.1276, pulling away from last week's eight-week high of $1.1366. The dollar index, which tracks the greenback against a basket of six major rivals, added 0.4 per cent to 94.923, pulling away from last week's low of 94.077, which was its lowest since June 24. Crude oil futures dropped, giving back some of their recent gains that propelled oil into bull market territory, after technicals had it in a bear market earlier this month. Crude futures have risen almost $10 a barrel since early August on speculation that Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries will agree next month to a production freeze deal with non-OPEC producers led by Russia. US crude fell 0.9 percent to $48.09 after gaining 9 per cent last week, rising for a second straight week. Brent crude was 1.3 per cent lower at $50.20 a barrel, after gaining 8 per cent last week, rising for a third week in a row. Gold fell on Monday to its lowest in over a week as the dollar strengthened. Spot gold was down 0.5 percent at $1,334.01 an ounce. (Reuters)

Asian shares dip, dollar rises as US Fed set to hike rates

World stocks hit a new one-year high today, while the dollar and benchmark government bond yields sank and precious metals rose after weak US productivity data again pushed back expectations of a Federal Reserve rate hike. 
 
Wall Street was expected to grind fractionally higher when it resumes, with jobs and housing market data on the agenda. 
 
Europe&#39;s main bourses were struggling with modest 0.3-0.4 per cent losses due to weak company results, although the MSCI&#39;s 46-country All World index remained positive after overnight Asian gains. 
 
With the focus on signs of pressure in the United States economy, demand for bonds firmed again, a factor already highlighted on Tuesday by the Bank of England&#39;s failure to prise enough debt from investors to meet its revamped bond-buying plan.. 
 
US Treasury yields dropped to 1.536 per cent in Europe, while Germany&#39;s 10-year bonds yield fell 1.4 basis points to minus 0.16 per cent as Berlin sold 4 billion Euros of bond at a new record low average yield of -0.09 per cent. 
 
The 10-year UK gilt yield also sank to a record low of 0.54 per cent in the wake of the BoE&#39;s bond buying issues. 
 
&quot;Central banks look increasingly accommodative and no one seems to be going against that trend ... which supports all asset prices,&quot; said Anton Heese, head of European rates strategy at Morgan Stanley in London. 
 
&quot;The growth prospects for the US economy are probably weaker than many anticipate.&quot; 
 
The bond moves had a clear impact on currencies, with the Dollar index, which tracks the US greenback against a basket of other top currencies, seeing its biggest drop in over a week, falling 0.65 per cent to 95.559. 
 
That in turn sent the Euro up 0.6 per cent to $1.1186, extending its recovery from Friday&#39;s one-week low of $1.1046. The Yen climbed to 101.20 per dollar and even the recently buffeted UK pound made ground. 
 
&quot;The release of the third consecutive decline in quarterly US productivity, the worst run since at least 1980, does not bode well for the prospects for the Dollar,&quot; Morgan Stanley head of currency strategy, Hans Redeker, said. 
 
 
Good as gold 
 
The Australian Dollar advanced to a more than three-month peak of $0.7729, having been buoyed this week by Australia&#39;s relatively high yields and stronger investor risk appetite. 
 
&quot;Part of the Australian dollar&#39;s resilience is the lack of follow-through in pricing for a Fed hike in September, limiting the US dollar&#39;s gains,&quot; analysts at Westpac said in a note. They recommended investors buy the Australian Dollar. 
 
The US dollar&#39;s weakness gave gold a lift, with the precious metal gaining 0.9 per cent to $1,352.26 an ounce. 
 
Palladium jumped more than 7 per cent to a 14-month high at one point as bets on lower prices were reversed after the metal, which is used in car catalytic converters among other things, broke above key chart levels. It surged nearly 20 per cent last month in its biggest one-month rise in 8-1/2 years. 
 
That may mean investors who had bet on lower prices could be exposed to heavy losses. 
 
&quot;You can talk about fundamental explanations, strong car sales, a reduction in supply from Russia, but those didn&#39;t happen overnight,&quot; Macquarie analyst Matthew Turner said. 
 
Oil prices slipped for a second straight day as top producer Saudi Arabia revealed its output hit a record 10.67 million barrels per day last month. It came after data had also shown a surprise US crude stockpile build. 
 
Brent futures fell as much as 1.5 per cent to $44.30 per barrel before recovering to $44.95. US crude also slipped 0.4 per cent to $42.62, extending Tuesday&#39;s 0.6 per cent decline. 
 
Emerging market stocks showed little reaction to the crude moves as they rose for a fifth straight day with many EM currencies also strengthening following the dollar&#39;s sell-off. 
 
MSCI&#39;s emerging market index hit a new one-year high as gains across Asia and other markets such as Greece and the Czech Republic helped extend its rise this month to over 3.5 per cent. 
 
(Reuters)

The US Dollar's weakness gave gold a lift, with the precious metal gaining 0.9 per cent to $1,352.26 an ounce

World stocks hit a new one-year high today, while the dollar and benchmark government bond yields sank and precious metals rose after weak US productivity data again pushed back expectations of a Federal Reserve rate hike. Wall Street was expected to grind fractionally higher when it resumes, with jobs and housing market data on the agenda. Europe's main bourses were struggling with modest 0.3-0.4 per cent losses due to weak company results, although the MSCI's 46-country All World index remained positive after overnight Asian gains. With the focus on signs of pressure in the United States economy, demand for bonds firmed again, a factor already highlighted on Tuesday by the Bank of England's failure to prise enough debt from investors to meet its revamped bond-buying plan.. US Treasury yields dropped to 1.536 per cent in Europe, while Germany's 10-year bonds yield fell 1.4 basis points to minus 0.16 per cent as Berlin sold 4 billion Euros of bond at a new record low average yield of -0.09 per cent. The 10-year UK gilt yield also sank to a record low of 0.54 per cent in the wake of the BoE's bond buying issues. "Central banks look increasingly accommodative and no one seems to be going against that trend ... which supports all asset prices," said Anton Heese, head of European rates strategy at Morgan Stanley in London. "The growth prospects for the US economy are probably weaker than many anticipate." The bond moves had a clear impact on currencies, with the Dollar index, which tracks the US greenback against a basket of other top currencies, seeing its biggest drop in over a week, falling 0.65 per cent to 95.559. That in turn sent the Euro up 0.6 per cent to $1.1186, extending its recovery from Friday's one-week low of $1.1046. The Yen climbed to 101.20 per dollar and even the recently buffeted UK pound made ground. "The release of the third consecutive decline in quarterly US productivity, the worst run since at least 1980, does not bode well for the prospects for the Dollar," Morgan Stanley head of currency strategy, Hans Redeker, said. Good as gold The Australian Dollar advanced to a more than three-month peak of $0.7729, having been buoyed this week by Australia's relatively high yields and stronger investor risk appetite. "Part of the Australian dollar's resilience is the lack of follow-through in pricing for a Fed hike in September, limiting the US dollar's gains," analysts at Westpac said in a note. They recommended investors buy the Australian Dollar. The US dollar's weakness gave gold a lift, with the precious metal gaining 0.9 per cent to $1,352.26 an ounce. Palladium jumped more than 7 per cent to a 14-month high at one point as bets on lower prices were reversed after the metal, which is used in car catalytic converters among other things, broke above key chart levels. It surged nearly 20 per cent last month in its biggest one-month rise in 8-1/2 years. That may mean investors who had bet on lower prices could be exposed to heavy losses. "You can talk about fundamental explanations, strong car sales, a reduction in supply from Russia, but those didn't happen overnight," Macquarie analyst Matthew Turner said. Oil prices slipped for a second straight day as top producer Saudi Arabia revealed its output hit a record 10.67 million barrels per day last month. It came after data had also shown a surprise US crude stockpile build. Brent futures fell as much as 1.5 per cent to $44.30 per barrel before recovering to $44.95. US crude also slipped 0.4 per cent to $42.62, extending Tuesday's 0.6 per cent decline. Emerging market stocks showed little reaction to the crude moves as they rose for a fifth straight day with many EM currencies also strengthening following the dollar's sell-off. MSCI's emerging market index hit a new one-year high as gains across Asia and other markets such as Greece and the Czech Republic helped extend its rise this month to over 3.5 per cent. (Reuters)

World stocks hit 1-year high as US data saps dollar, bond yields

Gold edged down on Friday as investors turned cautious ahead of US jobs data later in the day, but the precious metal remained on course for a sixth consecutive weekly gain. 
 
Spot gold was trading down 0.1 per cent at $1,358.36 an ounce by 0418 GMT. Bullion is up over 1 per cent so far for this week. 
 
US gold fell 0.1 per cent to $1,360.20 an ounce. 
 
&quot;We have seen some slight correction in gold prices from yesterday. Prices have come up quite a lot. It was long time since many of them decided to take profits,&quot; said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central. 
 
Ahead of the closely watched US non-farm payrolls report, data published on Thursday suggested a rebound in job growth after May&#39;s paltry gains. 
 
US private payrolls increased more than expected in June as small businesses ramped up hiring, and fewer Americans applied for unemployment benefits last week. 
 
&quot;A very strong jobs figure will trigger some short term pain for gold, however, the underlying uptrend should prevail in the medium term,&quot; MKS Group trader James Gardiner wrote in a note. 
 
But any weakness in hiring could be an indication that the US Federal Reserve may not raise interest rates anytime soon amid the economic uncertainty following the Brexit vote, analysts said. 
 
Gold is sensitive to higher rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced. 
 
Investors poured the most money into US-based funds invested in precious metals since February, adding $2 billion to in the latest week, data from Thomson Reuters&#39; Lipper service showed on Thursday. 
 
Technical analysts at ScotiaMocatta said pegged support for gold at $1,346 and resistance at $1,375.30, with the RSI (relative strength index) currently showing the yellow metal to be slightly in overbought territory and added that profit-taking may emerge in the short-term. 
 
SPDR Gold Trust, the world&#39;s largest gold-backed exchange-traded fund, said its holdings fell 0.42 per cent to 978.29 tonnes on Thursday from 982.44 tonnes on Wednesday.&nbsp; 
 
In wider markets, Asian stocks looked set to post their biggest weekly loss in three weeks on Friday and government bond yields plunged to record lows.&nbsp; 
 
Silver, which touched a two-year high on Monday, was trading up 0.4 per cent at $19.73. 
 
Among other precious metals, platinum and palladium were down 0.2 and 0.3 per cent at $1,083.80 an ounce and $606 an ounce, respectively. 
 
(Reuters)

US private payrolls increased more than expected in June as small businesses ramped up hiring

Gold edged down on Friday as investors turned cautious ahead of US jobs data later in the day, but the precious metal remained on course for a sixth consecutive weekly gain. Spot gold was trading down 0.1 per cent at $1,358.36 an ounce by 0418 GMT. Bullion is up over 1 per cent so far for this week. US gold fell 0.1 per cent to $1,360.20 an ounce. "We have seen some slight correction in gold prices from yesterday. Prices have come up quite a lot. It was long time since many of them decided to take profits," said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central. Ahead of the closely watched US non-farm payrolls report, data published on Thursday suggested a rebound in job growth after May's paltry gains. US private payrolls increased more than expected in June as small businesses ramped up hiring, and fewer Americans applied for unemployment benefits last week. "A very strong jobs figure will trigger some short term pain for gold, however, the underlying uptrend should prevail in the medium term," MKS Group trader James Gardiner wrote in a note. But any weakness in hiring could be an indication that the US Federal Reserve may not raise interest rates anytime soon amid the economic uncertainty following the Brexit vote, analysts said. Gold is sensitive to higher rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced. Investors poured the most money into US-based funds invested in precious metals since February, adding $2 billion to in the latest week, data from Thomson Reuters' Lipper service showed on Thursday. Technical analysts at ScotiaMocatta said pegged support for gold at $1,346 and resistance at $1,375.30, with the RSI (relative strength index) currently showing the yellow metal to be slightly in overbought territory and added that profit-taking may emerge in the short-term. SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.42 per cent to 978.29 tonnes on Thursday from 982.44 tonnes on Wednesday. In wider markets, Asian stocks looked set to post their biggest weekly loss in three weeks on Friday and government bond yields plunged to record lows. Silver, which touched a two-year high on Monday, was trading up 0.4 per cent at $19.73. Among other precious metals, platinum and palladium were down 0.2 and 0.3 per cent at $1,083.80 an ounce and $606 an ounce, respectively. (Reuters)

Gold eases ahead of US jobs data, but eyes 6th weekly gain

The Federal Reserve of the United States decided to keep interest rates unchanged in its June policy meeting due to uncertainty in the labour market and the United Kingdom&#39;s referendum on membership in the European Union (EU), minutes of the Fed&#39;s latest monetary policy meeting showed on Wednesday. 
 
Most (members) judged it appropriate to avoid overweighting one or two labour market reports in their consideration of the economic outlook, but they indicated that recent slowing in payroll employment gains had increased their uncertainty about the likely pace of improvements in the labour market going forward, said the minutes of the Fed&#39;s June 14-15 meeting. 
 
The UK vote was the other consideration for the US central banking system to hold off on raising interest rates. 
 
Members noted the considerable uncertainty about the outcome of the vote and its potential economic and financial market consequences, said the minutes. 
 
The minutes also showed that Fed officials disagreed in their judgment of employment, inflation, and pace of interest rate hikes in the future. 
 
Some officials judged that labour market conditions were at or close to the maximum employment, and some moderation in employment gains was to be expected, while others observed that there could be a possible downshift in the pace of improvement in the labour market, in view of the recent slow job gains, decline in labour participation rate and no reduction in part-time employees. 
 
In regard to inflation outlook, some officials observed that core inflation had risen, while several others continued to see downside risk to inflation. 
 
Some officials emphasised that it should not be delayed too long to further raise its interest rate with the employment and inflation close to the central bank&#39;s targets, while a couple of officials noted that they would need to be more convinced that the economy is strong enough and that inflation is moving closer to the target. 
 
(Reuters)

The UK 'Brexit' vote impacted the decision not to increase interest rates

The Federal Reserve of the United States decided to keep interest rates unchanged in its June policy meeting due to uncertainty in the labour market and the United Kingdom's referendum on membership in the European Union (EU), minutes of the Fed's latest monetary policy meeting showed on Wednesday. Most (members) judged it appropriate to avoid overweighting one or two labour market reports in their consideration of the economic outlook, but they indicated that recent slowing in payroll employment gains had increased their uncertainty about the likely pace of improvements in the labour market going forward, said the minutes of the Fed's June 14-15 meeting. The UK vote was the other consideration for the US central banking system to hold off on raising interest rates. Members noted the considerable uncertainty about the outcome of the vote and its potential economic and financial market consequences, said the minutes. The minutes also showed that Fed officials disagreed in their judgment of employment, inflation, and pace of interest rate hikes in the future. Some officials judged that labour market conditions were at or close to the maximum employment, and some moderation in employment gains was to be expected, while others observed that there could be a possible downshift in the pace of improvement in the labour market, in view of the recent slow job gains, decline in labour participation rate and no reduction in part-time employees. In regard to inflation outlook, some officials observed that core inflation had risen, while several others continued to see downside risk to inflation. Some officials emphasised that it should not be delayed too long to further raise its interest rate with the employment and inflation close to the central bank's targets, while a couple of officials noted that they would need to be more convinced that the economy is strong enough and that inflation is moving closer to the target. (Reuters)

Uncertainty makes US Fed hold off interest rate hike

It is a sign of caution that spreads through the global economic outlook when four of the world&#39;s top central banks, all due to meet within days of each other, are almost unanimously expected to make no change to their extraordinary stimulus programs.

While the US&nbsp;Federal Reserve, Bank of England, Swiss National Bank and the Bank of Japan are all dealing with varying amounts or shortages of inflation, none are expected to act ahead of one of the biggest risk events of 2016.

Britain&#39;s referendum on whether to remain in or leave the European Union has been creeping from the back to the front of investors&#39; minds. During the last full week of campaigning before the June 23 vote, it may dominate most discussion.

Janet Yellen&#39;s Fed has spent most of the past month or so dropping hints that a summer rate hike was on the way. However, disappointing May hiring data and a UK vote that is too close in the polls to have confidence in the outcome have toned down her message, making a rate rise on June 15 now highly unlikely.

That leaves financial markets stuck in a holding pattern with renewed fears about global growth pushing against safety nets that central banks have built up over the years, according to Valentin Marinov, head of G10 FX strategy at CA-CIB.

So a packed week of data releases for the world&#39;s largest economy, including retail sales, housing starts, building permits as well as inflation, will at best be able to help build the case for a Fed rise as soon as July, rather than September.

&quot;Weak labour market data have messed up the carefully-prepared script for the Fed&#39;s next rate move. An interest rate rise at the meeting next week is off the table,&quot; wrote Christoph Balz, economist at Commerzbank, in a note.

&quot;However ... the U.S. labour market recovery is not over yet and a rate hike at the meeting in July is therefore still on the agenda.&quot;

A recent Reuters poll showed four-fifth&nbsp;of a sample of 90 economists expect a rate rise in either July or September, with most leaning toward the latter month, and with many saying a hiring rebound could seal an earlier move.

June jobs data won&#39;t be released until early July. But for the most part, the economy has been performing well: an analysis of key economic releases since the last Fed meeting shows 70 per cent have come in at or above Reuters poll forecasts.

US&nbsp;retail sales may stage a milder 0.4 per cent rise on the month after a 1.3 per cent surge in April, while housing starts and permits will be watched closely after a blowout month in April for pending and new home sales.

Core consumer price inflation is likely to remain on a relatively steady course a few ticks above 2 per cent.

In Britain, where not a soul expects the Bank of England to change policy just ahead of the EU referendum but instead focus on contingency planning and market liquidity in the event of a vote to leave, price pressures are weaker.

Headline inflation, which the BoE targets, is forecast to rise to 0.4 per cent, with core inflation at 1.3 per cent. The UK jobless rate is forecast to hold steady at 5.1 per cent, close to what many would call full employment.&nbsp;

But with a slowdown this year in the UK economy which a majority of analysts attribute to jitters ahead of the referendum, talk about interest rates has shifted from the next rate rise to whether they will need to be cut.

In Japan, the dearth of inflation is much more severe, much as it has been for the better part of two decades and there is little hope for a revival any time soon.

So while the Fed is forecast to take a pass in June and possibly lift its federal funds rate gingerly in July, the Bank of Japan is forecast to take a pass on June 16 and do the opposite in July by piling on more stimulus.

Much of it will depend on the Yen exchange rate, which appears now to be out of the BOJ&#39;s control, having surged earlier this year when it surprised the markets by introducing by a narrow majority a negative deposit rate policy.

In Zurich, the SNB is also expected to leave its negative key rate unchanged at a midpoint of -0.75 per cent, according to a Reuters poll. There may be some signs of inflation turning but again, what the Swiss Franc does will matter a lot and what drives it is not completely within the SNB&#39;s control.

United States, England, Switzerland and Japan

It is a sign of caution that spreads through the global economic outlook when four of the world's top central banks, all due to meet within days of each other, are almost unanimously expected to make no change to their extraordinary stimulus programs. While the US Federal Reserve, Bank of England, Swiss National Bank and the Bank of Japan are all dealing with varying amounts or shortages of inflation, none are expected to act ahead of one of the biggest risk events of 2016. Britain's referendum on whether to remain in or leave the European Union has been creeping from the back to the front of investors' minds. During the last full week of campaigning before the June 23 vote, it may dominate most discussion. Janet Yellen's Fed has spent most of the past month or so dropping hints that a summer rate hike was on the way. However, disappointing May hiring data and a UK vote that is too close in the polls to have confidence in the outcome have toned down her message, making a rate rise on June 15 now highly unlikely. That leaves financial markets stuck in a holding pattern with renewed fears about global growth pushing against safety nets that central banks have built up over the years, according to Valentin Marinov, head of G10 FX strategy at CA-CIB. So a packed week of data releases for the world's largest economy, including retail sales, housing starts, building permits as well as inflation, will at best be able to help build the case for a Fed rise as soon as July, rather than September. "Weak labour market data have messed up the carefully-prepared script for the Fed's next rate move. An interest rate rise at the meeting next week is off the table," wrote Christoph Balz, economist at Commerzbank, in a note. "However ... the U.S. labour market recovery is not over yet and a rate hike at the meeting in July is therefore still on the agenda." A recent Reuters poll showed four-fifth of a sample of 90 economists expect a rate rise in either July or September, with most leaning toward the latter month, and with many saying a hiring rebound could seal an earlier move. June jobs data won't be released until early July. But for the most part, the economy has been performing well: an analysis of key economic releases since the last Fed meeting shows 70 per cent have come in at or above Reuters poll forecasts. US retail sales may stage a milder 0.4 per cent rise on the month after a 1.3 per cent surge in April, while housing starts and permits will be watched closely after a blowout month in April for pending and new home sales. Core consumer price inflation is likely to remain on a relatively steady course a few ticks above 2 per cent. In Britain, where not a soul expects the Bank of England to change policy just ahead of the EU referendum but instead focus on contingency planning and market liquidity in the event of a vote to leave, price pressures are weaker. Headline inflation, which the BoE targets, is forecast to rise to 0.4 per cent, with core inflation at 1.3 per cent. The UK jobless rate is forecast to hold steady at 5.1 per cent, close to what many would call full employment. But with a slowdown this year in the UK economy which a majority of analysts attribute to jitters ahead of the referendum, talk about interest rates has shifted from the next rate rise to whether they will need to be cut. In Japan, the dearth of inflation is much more severe, much as it has been for the better part of two decades and there is little hope for a revival any time soon. So while the Fed is forecast to take a pass in June and possibly lift its federal funds rate gingerly in July, the Bank of Japan is forecast to take a pass on June 16 and do the opposite in July by piling on more stimulus. Much of it will depend on the Yen exchange rate, which appears now to be out of the BOJ's control, having surged earlier this year when it surprised the markets by introducing by a narrow majority a negative deposit rate policy. In Zurich, the SNB is also expected to leave its negative key rate unchanged at a midpoint of -0.75 per cent, according to a Reuters poll. There may be some signs of inflation turning but again, what the Swiss Franc does will matter a lot and what drives it is not completely within the SNB's control.

Caution pervades at four of world's top central banks

federal-reserve

Federal Reserve, News on Federal Reserve, stories on Federal Reserve, articles on Federal Reserve, Federal Reserve stories at Wion, Federal Reserve news, Federal Reserve latest news

federal reserve