Fed rate hike predictions support dollar but weigh on stocks

Tesoro shares rose $3.23, or 3.8 percent, to $88.97.

Kansas City Federal Reserve Bank President Esther George also said that while she supports raising interest rates, the US central bank must do so only gradually. Sterling, which has had a relatively quiet week, trading within last week’s range, could be set for more volatility as we head towards Wednesday and investors start to weigh up what Hammond has in store.

The rally took a breather this week as investors seek more clarity regarding Trump’s policies and his campaign promises.

This gauge of the greenback against a basket of six major currencies was on track for a 4.4 percent two-week gain, which would be its biggest since March 2015.

ANALYST TAKE: “Markets continue to price in a more active Federal Reserve in the coming years, starting with a likely rate hike next month which is now more than 90% priced in by the markets”, said Craig Erlam, senior market analyst at OANDA.

DOLLAR BUOYANT: Predictions of a rate hike have been one of the main reasons why the dollar has been buoyant over recent weeks. “A number of Fed speakers have indicated that and they want the market to be prepared for when they do”, said Erik Wytenus, global investment specialist at J.P. Morgan Private Bank.

The ECB’s rate-setting meeting last month agreed on the need to maintain unprecedented monetary stimulus and to decide in December whether to extend the ECB’s 1.74 trillion euro asset buys, minutes of the meeting showed on Thursday.

The broader NSE index was up 0.04 percent at 8,082.7 as of 0615 GMT, while the benchmark BSE index was 0.03 percent lower at 26,222.18.

The Nasdaq hit a record high earlier in the session, helped by a rise in Microsoft MSFT.O and other big tech stocks.

The PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP) rose 0.3% Friday and increased 2.2% over the past week. Procter & Gamble gave up $1.04, or 1.3 percent, to $82.03 and drugstore operator Walgreens Boots Alliance slumped 98 cents, or 1.2 percent, to $83.01.

US consumer prices recorded their biggest increase in six months in October, data showed. The S&P Energy sector was the second best performer with a 0.5 percent increase as producers added to rig count, suggesting that they might be expecting a demand boost, Polarci said. Helping to support Yellen’s case for higher rates was fresh economic data on Thursday that showed US consumer prices rose in October from a year earlier at the fastest rate in two years.

Cisco fell 5.3 percent to $29.90 after its current-quarter forecast fell below analysts’ estimates.

Declining issues outnumbered advancing ones on the NYSE by 1,589 to 1,302. “If the negative political surprises don’t stop there and have a far more dramatic impact on Europe, the euro could fall much more”.