The dollar is turning in a mixed performance Wednesday afternoon, but is little changed overall against its major rivals. The U.S. currency weakened yesterday afternoon, following the cautious comments made by Federal Reserve Chair Janet Yellen.
The Federal Reserve anticipates that only gradual increases in the federal funds rate are likely to be warranted in coming years, the nation’s top central banker said Tuesday.
Yellen acknowledged that it is ‘too early’ to say if pickup in core inflation will prove durable. Amid low oil prices, she continues to expect overall PCE inflation for 2016 to come in “well below” the Fed’s 2 percent objective.
Given the risks to the outlook due to global problems, “I consider it appropriate for the Committee to proceed cautiously in adjusting policy,” she said.
Recent remarks by Fed officials had increased speculation that the Fed could raise interest rates at its next meeting in April. However, Yellen’s comments appear to have quashed those concerns.
Partly reflecting strong job growth in the trade, transportation and utilities sector, payroll processor ADP released a report on Wednesday showing slightly stronger than expected U.S. private sector job growth in the month of March.
ADP said private sector employment increased by 200,000 jobs in March after jumping by a downwardly revised 205,000 jobs in February. Economists had expected employment to climb by about 195,000 jobs compared to the addition of 214,000 jobs originally reported for the previous month.
Investors are eagerly awaiting the release of the U.S. jobs report for March on Friday.
Negative interest rates are not the main policy tool of the European Central Bank for boosting inflation and growth, and they will not be lowered deeper into “absurdly” negative territory though further moves cannot be ruled out, ECB Executive Board Member Benoit Coeure said.
In an interview with Politico, which was published on the ECB website on Wednesday, Coeure said banks have improved their interest margin amid stronger credit demand and lower risk. They can be reassured about the possible adverse effects of negative interest rates on their profitability, he added.
“They know we will not take rates into absurdly negative territory,” the policymaker said.
“But we can never rule out further moves. That would not be credible anyway.”
Coeure maintained that the ECB still had several tools to boost inflation and support economic growth even after a slew of measures announced earlier this month that included a reduction to all of its main three interest rates and a new long term refinancing operation.
The dollar dropped to a month and a half low of $1.1365 against the Euro Wednesday, but has since bounced back to around $1.1325.
Eurozone economic sentiment fell to its lowest level in more than a year in March, despite additional easing measures taken by the European Central Bank to tackle the deflation treat and stimulate growth.
The economic sentiment index dropped to 103 from a revised 103.9 in February, survey results from the European Commission showed Wednesday. The third consecutive fall took the index to its lowest level since February 2015, when the score was 102.2. Economists had forecast the index to remain at February’s original score of 103.8.
Germany’s consumer prices rose at a faster-than-expected pace in March after remaining unchanged in the previous month, preliminary estimates from Destatis revealed Wednesday. The consumer price index climbed 0.3 percent year-on-year following no change in February. Economists had forecast 0.1 percent rise.
The buck fell to over a 1-week low of $1.4458 against the pound sterling Wednesday, but has since rebounded to around $1.4370.
England/Wales house prices grew at a slower pace in February, data from Land Registry showed Wednesday. House prices increased 6.1 percent year-on-year in February, slower than January’s 6.5 percent growth.
The greenback slipped to over a 1-week low of Y111.993 against the Japanese Yen Wednesday, but has since bounced back to around Y112.515.
Industrial production in Japan fell a seasonally adjusted 6.2 percent on month in February, the Ministry of Economy, Trade and Industry said in Wednesday’s preliminary reading – marking the largest single-month decline in five years.
The headline figure missed expectations for a decline of 5.9 percent following the 3.7 percent increase in January.
The material has been provided by InstaForex Company – www.instaforex.com