Fed official still looking at 2015 rate hike

The Fed targets inflation of about 2 per cent. That’s a problem for the Fed because it needs inflation to pick up in order to justify a rate hike. The dollar’s six-month bull ride in particular has been based on rate differentials, but now, the one-directional lay up trade is in danger of been firmly broken; the market’s risk-on sentiment continues to gain traction after dovish interpretation of both the Fed and BoE minutes this week. In that scenario, raising interest rates could cause far more harm than good for an economic climate that has already struggled to make strides since the financial crisis ended in 2009.

The dollar index was last down 0.44 percent at 94.896. More data will be available for the committee’s December session. France’s official statistics office, said industrial output jumped 1.6 percent over one month, largely reversing a 1.1 percent drop in July.

Data on consumer spending, he said, will be the most important.

The Fed has kept its benchmark rate at a record low near zero since December 2008.

Atlanta Fed President Dennis Lockhart suggested in a speech earlier Friday that a rate hike is likely this year although he also noted downside risks to the outlook.

In an interview with CNBC, William Dudley said he expects solid US economic growth to offset weakness overseas, which is hurting USA exports.

The US unemployment rate, which now sits at 5.1 percent, doesn’t fully capture “additional forms of slack in the labor market”, Fischer said.

It has raised its expectations on the basis that a downgraded USA dollar should help to support gold.

He did not latch on to the weaker-than-expected September jobs report to bolster his argument, saying that it did not change his confidence that the US economy will reach full employment in a reasonable period of time.

SUPERVALU INC. (NYSE:SVU) finished last trade at $7.66, gaining 2.75%. A decline may cast further doubt on Federal Reserve plans to raise interest rates this year and undermine the United States currency, which fell the most in four months this week, paring a 2015 advance. France’s CAC 40 advanced 0.7 percent to 4,706.95.

The S&P 500 rose 17.60, or 0.9%, to 2013.43.

The New Zealand dollar, another commodity currency, hit a more than 10-week high against the dollar of $0.6722.

Gold has recently come under pressure from expectations that the Fed will raise interest rates this year, potentially lifting the opportunity cost of holding non-yielding bullion. The yield briefly touched a two-week high of 2.970 percent. Brent crude, which is used to price worldwide oils, rose 46 cents to $53.84.

Federal Reserve officials said the USA recovery will probably remain insulated from the slowdown in China that has roiled the global economy, keeping the central bank on track to begin ending its extraordinary stimulus later this year.