Daily Market Lookup
- Asia shares inched up on Tuesday while oil fell for a second session as investors awaited clues on whether the Federal Reserve will raise U.S. interest rates this year. A survey of Japanese manufacturing activity showed signs of steadying in August as output rose for the first time in six months, but the improvement was marginal and had little impact on stocks. The IHS Markit/Nikkei Japan Flash PMI rose to 49.6 in August from a final 49.3 in July. More flash surveys are due from Europe and the United States later in the day. The whole world seems to have hushed ahead of comments from Fed Chair Janet Yellen at the central bank's annual meeting in Jackson Hole on Friday. Investors still doubt the stars will align for a hike anytime soon, so a hawkish tone from Yellen would challenge that equanimity. Prices retreated from two-month highs on worries about burgeoning Chinese fuel exports, more Iraqi and Nigerian crude shipments and a rising U.S. oil rig count. The New Zealand dollar blipped higher after the country's central bank forecast another 35 basis points in possible rate cuts, less than many investors had wagered on.
- The dollar dipped against the yen on Tuesday, while the New Zealand dollar rose after the nation's central bank chief said he did not see the need for a rapid succession of interest rate cuts. The kiwi was up 0.6 percent at $0.7308 NZD=D4 after Reserve Bank of New Zealand Governor Graeme Wheeler said the current interest rate track involves further monetary easing but did not see the need for a rapid series of rate cuts. The RBNZ in early August cut interest rates by 25 basis points to a record low of 2.0 percent and said further policy easing may be needed The kiwi nevertheless rose to a 15-month high of $0.7351 mid-month, as it has proved resilient to falling cash rates at home given they remain far higher relative to those of other developed economies. The market's focus was on whether she would express hawkish views similar to those of Vice Chair Fischer and New York Fed President William Dudley, or take a more subdued stance in line with the July Fed policy meeting minutes that suggested the central bank was not in a hurry to raise rates. Over the immediate horizon, the market is looking for catalysts from the euro zone and U.S. purchasing managers index (PMI) data and U.S. home sales numbers due later in the session.
- U.S. Federal Reserve has two guiding goals when designing monetary policy: maximum employment and stable inflation. But as the country's central bankers converge for their annual symposium in Jackson Hole, Wyoming this week, they are under increasing pressure to reform their own system and goals to better reflect the diversity of America and its incomes. At this year's flagship economic policy conference, from Aug. 25 to 27, U.S policymakers will confer not only with their counterparts from around the world but also host a meeting on Thursday with a group calling for a radical overhaul of the Fed. Fed Up, a network of community organizations and labor unions that wants a more diverse, transparent and income-inequality aware central bank, will meet with Kansas City Fed President Esther George. It may be one reason why the organizers changed the dress code for the evening, usually a suited and booted affair, to casual attire. So far three other Fed policymakers, New York's William Dudley, Cleveland's Loretta Mester and Boston's Eric Rosengren, are also scheduled to show up. A Fed spokesman said Federal Reserve Governor Lael Brainard from the Washington-based Board of Governors also plans to attend the meeting. The activists will look to build on their proposals, put forward in conjunction with former top Fed policy adviser Andrew Levin, to make the Fed's 12 regional banks government entities. The Fed is the world's only major central bank that is not fully public. Oil prices fell over 1 percent on Tuesday, with Goldman Sachs warning that August's price rally had been overdone and that a proposed oil production freeze at current near-record levels would not help rein in an oversupplied market. Analysts said the falls were a result of an overdone price rally this month which lifted crude by over 20 percent between the beginning of the month and late last week. "While oil prices have rebounded sharply since Aug. 1, we believe this move has not been driven by incrementally better oil fundamentals, but instead by headlines around a potential output freeze as well as a sharp weakening of the dollar (and exacerbated by a sharp reversal in net speculative positions)," Goldman Sachs said. The bank said a proposal by members of the Organization of the Petroleum Exporting Countries (OPEC) and other producers like Russia to freeze output at current levels "would leave production at record highs" and therefore do little to bring supply and demand back into balance. Goldman also said the likelihood of a deal "may not be high" due to disputes between OPEC members Saudi Arabia and Iran as well as uncertainty over non-OPEC producing giant Russia's willingness to cooperate.
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