Fed policymakers revived talk of a possible rate hike in September after two Fed officials kept open the possibility of a move as early as next month. New York Fed President William Dudley said on the Tuesday the Fed is edging closer towards the point in time where it will be appropriate to raise rates further. Atlanta Fed President Dennis Lockhart sounded even more hawkish, saying its conceivable to have two rate increases this year.
The remarks pushed the dollar back above the 100 yen level after dropping to a 7-week low of 99.53 yesterday. It was testing the 101 level in Asian trading today and was helped higher by another warning by Japans Finance Ministry of currency intervention if there are excessive moves.
The dollars rebound was more limited against the euro and the pound with both currencies holding on to most of yesterdays gains. The euro was last trading around 1.1260 dollars, while the pound managed to hold above 1.30 dollars. Sterling was boosted yesterday from stronger-than-expected inflation data but could come under pressure from the latest jobless and earnings data expected later in the day.
The New Zealand dollar
The New Zealand dollar made a fresh attempt to reclaim the 0.73 level against the greenback today but fell back after hitting a one-week high of 0.7321. The kiwi was boosted in early Asian trading from a 12% jump in dairy prices in the latest fortnightly auction. However, the currency failed to find support from better-than-expected jobless data.
The unemployment rate in New Zealand fell to 5.1% in the second quarter from 5.7% previously and below estimates of 5.3%. There was also a sharp increase in the participation rate, pointing to a healthy labor market. But the kiwi slid after the data, dropping to 0.7255 in late Asian trading.
The Australian dollar
The Australian dollar was also weaker on Wednesday as it was weighed by muted wage growth data. Wages in Australia rose by 2.1% year-on-year in the second quarter, slightly stronger than the expected rate of 2.0%. However, the figure is the lowest on record and means it is unlikely to create any inflationary pressures in the economy. The aussie was last trading at 0.7667, down from yesterdays high of 0.7749.
Crude oil prices came off yesterdays one-month highs on profit taking following four straight sessions of solid gains. WTI oil futures were down 0.6% at $46.30 a barrel, while Brent crude was last at $48.80 a barrel.