US Fed widely expected to increase interest rates in December

“I don’t think there’s any fundamental shift here, just a bit of profit-taking after the minutes, and I don’t see any change to the dollar’s trajectory, ” said Mitul Kotecha, head of Asian FX and rates strategy at Barclays in Singapore.

Nonetheless, the case can be made that the latest economic data emanating of the United States all point toward a rate hike, as the bench marks set by the Fed were met, and in some cases were surpassed. “The US financial system appeared to have weathered the turbulence in global financial markets without any sign of systemic stress”, it said.

Federal Reserve Chair Janet Yellen did say that the us economy’s performance is better and that there is a live possibility that there will be a rate hike in December.

The Fed also will have to confront how it judges progress towards its 2 percent medium-term inflation target and whether it waits for clear evidence of a rise in prices or tries to act in advance of one, Lockhart said.

The greenback gained about 6.1 per cent since the October meeting on the prospect of the US’s zero interest rate policy coming to an end, and some investors took the opportunity to cash in those gains after the minutes stuck to the official statement last month. Its rate-setting committee will next meet on December 15-16.

Traders are also awaiting the release later in the day of minutes from the U.S. central bank’s October policy meeting, hoping for some clues about board members’ thinking and possible pointers to their plans for next month’s gathering.

“The pace of the rise is what s much more important than the rate rise itself”, Angus Gluskie, a managing director at White Funds Management in Sydney, told Bloomberg News.

Bank Indonesia on Tuesday eased monetary policy by boosting banks’ lending power, while leaving its benchmark interest rate unchanged. The stock market no longer sees a rate increase as a threat, climbing in the face of increasing odds of a December move.

The Federal Reserve may be heading for a “slow… halting” effort to raise borrowing costs after it begins the first tightening cycle in about a decade, Atlanta Fed President Dennis Lockhart said on Thursday.

The premium offered by USA two-year debt over its German counterpart also yawned out to 124 basis points, the fattest margin since 2006 and a positive for the dollar.

“Dollar gains are likely to be somewhat limited after the Fed starts hiking in December”, Ms. Harajli said.

The more hawkish Fed officials believe a delay in raising rates could “increase uncertainty in financial markets and unduly magnify the perceived importance of the beginning of the policy normalisation process”.