Dollar slips due expected interest rate hike

“More generally, the decline in October does not indicate that deflation risks are rising and shouldn’t prevent the Fed from raising interest rates at December’s FOMC meeting”, he added.

On Sunday, Finance Minister Nhlanhla Nene told Bloomberg that the Fed move might already have been priced in by investors and the rand was unlikely to lose more.

The US central bank has kept its short-term interest rate near zero since December 2008, the height of the financial crisis that culminated in the bankruptcy of the global financial services firm Lehman Brothers and led to massive government bailouts of the USA financial industry. Interest rates determine borrowing costs and can affect your pocketbook whether you are a saver, borrower or investor.

“Fed officials spoke today but remarks from the most important official, Chair Janet Yellen, were mum on policy specifics”, Manimbo said.

The annual inflation rate has eased and is set to fall to 3.6 percent from its 8.36 percent peak in December, BI has said.

The price index for personal consumption expenditures, the Fed’s preferred inflation gauge, was up only 0.2% from a year earlier in September.

The currency pair traded between 1.0714 and 1.0817 on Friday before settling at 1.0764, down 0.0051 or 0.47% on the session.

The Fed’s weak inflation/strong employment conundrum deepened on Thursday as weekly jobless claims stayed near 15-year lows, with job openings at the second-highest level in the history of the series.

Fischer also noted that “it may be appropriate” to finally raise rates at the Fed’s December meeting, although events could intervene over the next month to dissuade members of the monetary policy committee from doing so.

“I think there’s a chance we are behind the curve, but it will be a year or two before we figure that out”, he said. “We have room to accelerate if we find out that we wish we’d started earlier”.

Levy says raising the interest rate could slow down the housing market, which would have an adverse effect on the overall economy. Domestic demand continues to grow at a solid pace, and the fundamentals supporting domestic growth look sturdy.

We’ll get our subsequent dose of Fed commentary Thursday night when the Fed’s No. 2 – Stanley Fischer – speaks inWashington D.C. However he steered there was no motive to maintain ready. And it ranks in the 99.9th percentile of the widest spreads over the past 10 years. But he suggested there was no reason to keep waiting.

“While the dollar’s appreciation and foreign weakness have been a sizable shock, the USA economy appears to be weathering them reasonably well”, he said.

“The markets will take a few time to digest the certainty of higher rates”, he said. The number of people who applied for United States unemployment benefits was unchanged at 276,000 in the first week of November, remaining near a 15-year low.

In China, where Beijing has rolled out a flurry of support measures since a year ago to avert a sharp slowdown, key data on Wednesday will show how the country’s housing market is performing and whether it is supporting the struggling economy.