MW: Dollar trims gains after Fischer says Fed won’t hike until inflation picks up
The dollar trimmed early gains against its main rivals Monday after Federal Reserve Vice Chairman Stanley Fischer said the central bank won’t raise interest rates until inflation has returned to normal.
The comments seemingly are at odds with those made by Atlanta Fed Governor Dennis Lockhart in an interview with The Wall Street Journal last week. In the interview, Lockhart said U.S. economic data would need to deteriorate sharply to prevent the Fed from raising rates in September.
Lockhart, a voting member of the policy-making body this year, is set to speak at the Atlanta Press Club at 12:25 p.m. Eastern. The next two-day meeting of the Fed’s rate-setting committee begins Sept. 16.
The ICE U.S. dollar index DXY, +0.10% a measure of the dollar’s strength against a basket of six rivals, rose 0.2% to 97.7200.
The euro EURUSD, -0.1003% weakened to $1.0957 from $1.0969 late Friday in New York. The dollar USDJPY, +0.37% meanwhile, traded at 124.60 yen, up from ÂĄ124.21 late Friday.
Investors will pay particular attention to comments from the Fed governors because there’s little important U.S. economic data expected this week, said Craig Erlam, senior market analyst at Oanda.
“Wages remain the potential stumbling block for the Fed. While wage growth is being seen, it remains fairly subdued by U.S. standards and the stronger dollar won’t be helping this,” Erlam said.
Elsewhere, the Australian and New Zealand dollars were two of the worst performers against the dollar after Chinese production data disappointed, according to Adam Cole, head of G-10 FX strategy at RBC Capital Markets.
The aussie AUDUSD, -0.7279% tumbled to 73.67 cents from 74.19 cents late Friday in New York. The kiwi NZDUSD, -0.7850% fell to 65.81 cents from 66.21 cents late Friday.
