US Fed poised to increase the interest rates in December meeting

It is near one-year highs against the euro and six-month highs against the yen.

“It’s all about expectations, and what markets expect is a large fiscal stimulus, mostly infrastructure spending, and for the Federal Reserve to be much more aggressive in hiking rates”, Capital Economics analyst Simona Gambarini said. “I suspect we’ll see an 11 handle on gold today”, he said, referring to prices dropping below $1,200 an ounce. With a rate hike next month seen as a near-certainty, the dollar and bond yields are rising and investors are selling assets that don’t pay interest.

U.S. stocks had been on a tear since Donald Trump’s surprise victory in the presidential election last week as his proposals to increase infrastructure spending and reduce taxes are seen benefiting the economy.

The Indian rupee closed near nine month low against the U.S. dollar due to higher dollar demand from importers and a weak domestic stock market.

The greenback hit a 5-1/2 month high against the yen of 110.92, while China’s yuan, which is on track for its biggest yearly drop since 1994, reached a fresh eight-year low.

The dollar rallied on the prospect of higher US interest rates. The Dow has set several records since the election, while the S&P 500 and Nasdaq are close to records they set a few months ago. Botox maker Allergan retreated $8.20, or 4.1 percent, to $191.78 and biotech giant Amgen fell $2.13, or 1.4 percent, to $145.23. The Standard & Poor’s 500 index lost 5.22 points, or 0.2 percent, to 2,181.90. It was down 4.7 percent for the week.Expectations of yield differentials also helped the dollar gain on the yen, in the wake of the Bank of Japan’s move on Thursday to buy unlimited bonds.

In Europe, Italian 10-year bond yields rose 8 basis points to 2.12 per cent, racking up 44 basis points over the last fortnight in its biggest surge since May 2012.

US stocks had been on a tear since Donald Trump’s surprise victory in the presidential election last week as his proposals to increase infrastructure spending and reduce taxes are seen benefiting the economy. The December meeting will include a news conference by Yellen, when she will be able to explain the Fed’s action and perhaps provide guidance on how many further rate increases it foresees in 2017. Reports Thursday showed US housing starts jumped to a nine-year high in October, while jobless claims fell to the lowest level in four decades.

ENERGY: Benchmark U.S. crude gave up 40 cents at $45.02 a barrel in NY, while Brent crude, which is used to price worldwide oils, slid 41 cents to $46.08 a barrel in London. Natural gas fell 6 cents, or 2.2 percent, to $2.70 per 1,000 cubic feet. In other news, Sky News reported that Tesco’s boss had called on suppliers not to make United Kingdom shoppers pay for the weak pound just so they can report a healthy bottom line. USA stocks were poised for a steady opening, with Dow futures and the broader S&P 500 futures up 0.1 percent.