Rand stable ahead of United States interest-rate announcement

Owen Stevens
June 14, 2017

In currency markets, the dollar is up to 110.22 yen from Tuesday's 110.04 yen.

Market participants' focus will be on signals on the frequency of further hikes and how the Fed plans to unwind its huge Treasury bond stockpile over the years ahead.

Economists polled by Reuters overwhelmingly see the USA central bank hiking its benchmark rate to a target range of 1.00 to 1.25 per cent this week, though expectations for further rate increases are fading.

The New Zealand dollar fell from a three-month high against the pound after stronger-than-expected United Kingdom inflation weakened the case for further Bank of England rate cuts and was little changed against the greenback ahead of the Federal Reserve statement and domestic growth data.

All eyes were on the U.S. central bank, which is scheduled to release its rate decision at 1800 GMT on Wednesday with a news conference to follow from Chair Janet Yellen.

The shekel-dollar exchange rate has fallen to a new 3-year low (since August 2014) despite the US Federal Reserve's expected decision today to raise the interest rate by 25 basis points to the 1%-1.25% range. At $1.2730 and 88.07 pence per euro it is still down around 2 percent since the release of exit polls on Thursday.

Against a basket of currencies, the dollar barely budged at 96.978.

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The New Zealand dollar slipped 0.2 per cent to $0.7206 after touching a low of $0.7200, moving away from the previous session's almost four-month high of $0.7228.

The Federal Reserve is set to raise short-term interest rates Wednesday for the third time in six months - a vote of confidence in the American economy and especially in the resilience of the USA job market. The Australian dollar rose to $0.7560, from $7542 on Monday.

UK's benchmark FTSE 100 closed down by 0.16 percent, the pan-European FTSEurofirst 300 ended the day up by 0.46 percent, Germany's Dax ended up by 0.57 percent, France's CAC finished the day up by 0.42 percent.

USA equity markets gained ground on Tuesday with the S&P 500 index advancing to a fresh record high as underlying confidence in the market held firm. The announcement is due at 2 p.m. E.T.

USA gold futures for August delivery settled down $0.3, or 0.02 percent, at $1,268.60.

Fed funds futures on Tuesday suggested traders saw about a 29 per cent chance of rates rising to 1.25-1.50 per cent at the Fed's September 19-20 meeting, and a 57 per cent chance of such a move at its December 12-13 meeting.

Oil prices edged higher on Tuesday after OPEC detailed supply cuts around the world, but the cartel also said overall production rose in May, and crude stayed well below $50 a barrel despite the modest recovery.

Other reports by VgToday

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