Dollar
The dollar gained in Asian trading on Friday but was on track to end a tumultuous week with losses after the Federal Reserve trimmed its long-term interest rate expectations and the Bank of Japan rebooted its monetary policy framework.
The dollar index, which tracks the greenback against a basket of six major rivals, was slightly higher at 95.456 .DXY, on track to log a weekly loss of 0.7 percent.
Weakness in the U.S. dollar has been limited after the Federal Open Market Committee left U.S. interest rates steady Wednesday, says BNP Paribas, suggesting that any dips in the U.S. currency may be a buying opportunity since policyholders at least signaled a willingness to hike. Three FOMC voters dissented on the vote, favoring a hike instead, and the so-called dot-plots show that 14 of 17 Fed members see at least one hike in 2016. Dollar fallout “thus far has been limited, consistent with two points,” BNP Paribas says. “First, the statement signals a strong bias to hike this year, noting that risks to the outlook at now roughly balanced and that the case for a rate increase has risen. Second, the market was positioned net short USD heading into the meeting. While it is possible in the near term the USD range could extend a bit further on the downside, we would view dips as a buying opportunity.” Just before 8 a.m. EDT, the December dollar index was down 0.545 point to 95.120. Metals traders tend to keep close tabs on moves in the dollar since precious and base metals alike tend to move inversely to the U.S. currency.
U.S. job market firming; tight inventories constraining housing
The number of Americans filing for unemployment benefits unexpectedly fell last week to a two-month low, pointing to labor market strength that could pave the way for the Federal Reserve to raise interest rates by December.
The upbeat initial jobless claims data came a day after the U.S. central bank left interest rates unchanged but strongly signaled it could raise borrowing costs by the end of the year, citing a recent pickup in economic growth and continued progress in the labor market.
While other data on Thursday showed home resales fell in August for a second straight month, realtors and economists blamed the slump on a chronic shortage of houses available on the market, which is limiting choice for buyers.
The housing market remains on solid ground, with home prices rising at a moderate pace.
"The economy is stronger than we thought with another turn tighter of the screw for the labor market. If Fed officials are waiting for the economy to improve further before raising rates, they are just too late," said Chris Rupkey, chief economist at MUFG Union Bank in New York.
Initial claims for state unemployment benefits declined 8,000 to a seasonally adjusted 252,000 for the week ended Sept. 17, the Labor Department said, the lowest level since mid-July.
In a second report on Thursday, the National Association of Realtors said existing home sales slipped 0.9 percent to a seasonally adjusted annual rate of 5.33 million units in August. The NAR said a dearth of properties for sale, which was keeping prices elevated, was largely to blame for the slump in activity.
Oil rises more on U.S. crude draw, pares gains on OPEC doubt
Oil prices rallied again on Thursday, boosted for a second day by U.S. government data that showed a surprising crude inventory drop, but crude futures pared gains as traders worried that OPEC was not nearing an agreement to reduce a global glut.
Oil prices got more support from the dollar's .DXY slide a day after the Federal Reserve kept U.S. interest rates unchanged. [FRX/]
U.S. West Texas Intermediate (WTI) crude futures CLc1 settled up 98 cents, or 2.2 percent, at $46.32 a barrel. The session high for WTI was $46.52.
Reference: KITCO, Reuters
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