Asian currencies retreat as talk of Fed rate hike returns

AFP, SINGAPORE: The dollar was dominant in Asia Tuesday as Fed officials talked up expectations for an increase in interest rates within the year after deciding against a raise last week.
Regional currencies were on the retreat amid concerns that an interest rate hike would spark an outflow of capital from emerging markets to seek higher returns.
A decision last week by the Federal Open Market Committee (FOMC) of the US central bank to hold off a much anticipated rate increase this month was widely welcomed in the region and weakened the greenback.
But comments since the weekend by Fed officials that an increase is likely to push through within the last few months of the year injected fresh vigour into the dollar.
“Fed rate hike bets are creeping back after Atlanta Fed president (Dennis) Lockhart, a known hawk and FOMC voter, reiterated his views of a rate hike this year,” said Bernard Aw, market strategist at IG Markets in Singapore.
He told AFP this “reinforced” the remarks made at the weekend by his colleagues James Bullard and John Williams of a rate increase this year.
“The dollar gained against major currency pairs during the overnight session, moving back to pre-FOMC levels,” Aw said.
“Investors are cautiously taking on some risk, where we have seen US equities advancing while US treasuries were sold.” The Fed has two meetings left this year, one in October and the other in December. Markets are looking at either of those meetings for a decision on whether
to lift rates for the first time in more than nine years.

Asian currencies retreat as talk of Fed rate hike returns

AFP, SINGAPORE: The dollar was dominant in Asia Tuesday as Fed officials talked up expectations for an increase in interest rates within the year after deciding against a raise last week. Regional currencies were on the retreat amid concerns that an interest rate hike would spark an outflow of capital from emerging markets to seek higher returns. A decision last week by the Federal Open Market Committee (FOMC) of the US central bank to hold off a much anticipated rate increase this month was widely welcomed in the region and weakened the greenback. But comments since the weekend by Fed officials that an increase is likely to push through within the last few months of the year injected fresh vigour into the dollar. Fed rate hike bets are creeping back after Atlanta Fed president (Dennis) Lockhart, a known hawk and FOMC voter, reiterated his views of a rate hike this year, said Bernard Aw, market strategist at IG Markets in Singapore. He told AFP this reinforced the remarks made at the weekend by his colleagues James Bullard and John Williams of a rate increase this year. The dollar gained against major currency pairs during the overnight session, moving back to pre-FOMC levels, Aw said. Investors are cautiously taking on some risk, where we have seen US equities advancing while US treasuries were sold. The Fed has two meetings left this year, one in October and the other in December. Markets are looking at either of those meetings for a decision on whether to lift rates for the first time in more than nine years.