Published: Thu, January 10, 2019
Economy | By

Trump Complains Again About Fed, Calling Rates ‘Rapidly Raised’

Trump Complains Again About Fed, Calling Rates ‘Rapidly Raised’

Fed Chairman Jerome Powell (pic) has said the Fed is not on a preset path of rate hikes and will be sensitive to the downside risks markets are pricing in.

Gold rose on Monday, just below a more than six-month peak hit in the last session, as the dollar slid on reduced chances of further rate hikes by the U.S. Federal Reserve, and as the United States and China resumed trade talks.

"The Fed is listening to the market and has acknowledged flashing market signs", said Sim Moh Siong, currency strategist at Bank of Singapore.

The rupee has fallen 0.86 percent this year.

Nomura chief China economist Ting Lu said Beijing's latest moves to unlock liquidity in the financial system "reflect its increasing concerns about looming growth headwinds and its increased willingness to step up policy easing and stimulus".

He warned, however, that there is continued uncertainty about global growth, trade talks between the United States and China and US monetary policy.

The US dollar had gained 4.3 per cent in 2018 as the Fed hiked rates four times on the back of a strong domestic economy, falling unemployment and rising wage pressures. This, along with a 100 basis point cut in China's bank reserve requirement ratios and comments from Fed Chair Jerome Powell that the USA central bank would be flexible in its approach in 2019, has been the main driver for the recovery. Bostic, who is not a voting member of the Federal Open market Committee this year, said the Fed may only need to raise rates once in 2019.

"Last Friday's strong USA jobs data suggested that recession fears were overblown", said Philip Wee, currency strategist at DBS in a note.

Analysts at Bank of America Merrill Lynch noted global equity markets had lost $19.9 trillion since January previous year, and a record $84 billion had flowed out of stocks in just the past six weeks.

Wee said he still expects the Fed to hike rates twice this year.

The U.S. dollar index, which measures the greenback's strength against a basket of six major currencies, was down 0.43% to 95.33, the weakest level since October 22.

Chinese stocks firmed after the country's central bank announced an easing in policy on Friday, with 100 basis points of cuts to bank reserve requirements freeing up around $116 billion for new lending.

European stocks were more or less flat across the board, though mining stocks surged 1.1 percent after the reserve requirement ratio cut from China boosted metals prices, especially steel and iron ore.

US gold futures gained 0.3 percent to $1,289.40 per ounce.

While U.S. stocks are still up since Trump's election in November 2016, they've plunged from a record reached in September. South Korea's Kospi climbed 1.3%, Australia's S&P/ASX 200 benchmark rose 1.1% and Hong Kong's Hang Seng Index rose 0.8%.

After gains of more than 2 percent in Shanghai and HK on Friday before the data and Powell's comments, both markets added nearly 1 percent more on Monday.

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