The Federal Reserve is expected to begin reducing interest rates next month, as betting on the positive consumer inflation data that came in overnight supported lower U.S. Treasury yields and stronger Asian stocks on Thursday.
increases on Wall Street were followed by increases in regional stocks; as of 01:39 GMT, Australia’s stock benchmark was up 0.1% and Japan’s Nikkei was up 0.5%.
Hong Kong’s Hang Seng declined by 0.3%, whereas mainland Chinese blue chips increased by 0.4%. U.S. S&P 500 futures were up 0.1% following the cash index’s 0.4% gain on Wednesday, which was supported by the consumer price index’s smallest increase in over three years.
No Increase In Treasury Yield
After falling to its lowest level against the euro since the end of last year over night, the dollar has continued to weaken. The single currency reached $1.10475 in the previous session and then traded flat at $1.1009.
In Asian hours, the yield on the 10-year Treasury note increased somewhat to 3.84%, from a low of 3.811% on Wednesday. Though opinions on whether the Fed would choose to implement a massive 50 basis-point decrease are divided, traders are still certain that the policymakers will lower rates on September 18 for the first time in 4 and a half years.
Although inflation is dropping, there are indications that it might stay sticky, which led to a decrease in bets for a bigger cut to 37.5% from about 50% the day before.
UK Inflation
The release of U.S. retail sales data later on Thursday marks a significant macroeconomic test. Given the market’s recent worries about a U.S. recession, “a negative retail control sales number would likely set alarm bells ringing,” according to IG market analyst Tony Sycamore.
As the pair resumed its week-long consolidation around the 147 mark, the dollar remained steady at 147.35 yen. Soft UK inflation data raised the possibility of quicker, more significant rate reduction from the Bank of England, but sterling remained weak. The euro fell by 0.3% on Wednesday and was unchanged at $1.2824.
The Australian dollar, which had been volatile in response to a gain in employment, had erased early losses and was now trading around $0.6600. Gold recovered 0.1% to $2,449.60 an ounce following a 0.7% decline on Wednesday.
In an attempt to increase demand, oil prices increased on Thursday, regaining some of the ground lost the day before due to possible Fed rate cuts.
United States West Texas Intermediate crude climbed 0.3% to $77.21 and Brent crude futures gained 0.2% to $79.93 per barrel. After an unanticipated increase in U.S. crude stocks on Wednesday, both benchmarks saw losses of more than 1%.
