US Federal Reserve chairman Jerome Powell gave a positive assessment of the US economy by tracking losses in Asian currencies which boosted the dollar.
Powell reiterated his positive view of the USA economy in the second round of monetary policy hearings before legislators, although he noted the central bank was "slightly more anxious about lower inflation", a comment that could weigh on the pace for future rate hikes.
"With the Fed poised to hike further, currency market focus is shifting back towards the spread between the USA two-year yield - which is now well over 2 percent - and those of other countries, like Japan", said Takuya Kanda, general manager at Gaitame.Com Research Institute. "But nonetheless, it has significant effects on the economy".
Powell tells lawmakers, "We have this precious grant on independence".
"The economy is still good and interest rate still up, so that's good for the USA dollar and negative for gold for the time being".More news: Barack Obama: ‘Men Have Been Getting On My Nerves Lately’
Asian markets rose on Wednesday, tracking a Wall Street rally after the head of the Federal Reserve expressed confidence in the USA economy despite fears of a global trade war.
PTI reported that the gold futures fell by Rs 29 to Rs 29,700 per 10 grams as participants cut down bets amid a weak global trend.
P stocks fell the most, down 1.2 percent, weighed down by a 4 percent drop in Telenor (TEL.OL) after the Norwegian telecoms operator posted second-quarter results that lagged forecasts. Gold slumped to a year low before rebounding.
- Wage growth at last? The dollar climbed to a six-month high against the yen. The unemployment rate is historically low and expected to decline further.
He noted that the number of people in the workforce had remained stable, which is "a sign of labor market strength", given the retirement of the baby boom generation which is taking workers out of the labor force. "From this context the impact on the broader economy, inflation and therefore the stock markets should be limited", said Soichiro Monji, senior economist at Daiwa SB Investments in Tokyo.More news: 'Black-ish' Star Anthony Anderson Faces Criminal Investigation, 'Unequivocally Disputes' Accusation
In his semi-annual testimony to Congress Tuesday, Powell described the Fed's process for slowly raising interest rates as "running smoothly".
Challenged by several senators on the sluggish wage growth, Powell agreed "not everybody is experiencing the recovery".
"We don't have those tools, you have those tools".
In the past, when this yield curve has become inverted - meaning that short-term rates are higher than long-term rates - that development has often signaled a recession.More news: Aussie PM Turnbull calls on Pope to fire disgraced archbishop