US Dollar Rises as Yellen’s Testimony Increases Fed Rate Hike Bets

Emerging markets were the hardest hit following the Fed announcements, with broad declines worldwide. The Federal Open Market Committee is scheduled to meet December 15-16 to discuss whether the economy is stable enough to handle higher interest rates.

Ms. Yellen had said that in the event that the incoming information supported economic growth, an interest rate hike in “December would be a live possibility”.

Shares of Twenty-First Century Fox dropped 5.2 per cent to $29.65 after it reported lower-than-expected quarterly revenue. Yellen did stress that no decision has been made yet and a move in December will depend on how the economy fares between now and then. The Fed in its October policy statement was deliberately trying to convince investors of a possible December interest rate hike, and was successful in doing so, Atlanta Fed President Dennis Lockhart said on Thursday. “The month-to-month stuff is killing everybody”, he said as the market has been whipsawed all year by speculation on timing of a rate hike. Investors expect that USA employers added 185,000 jobs last month and that the unemployment rate remained steady at 5.1 percent.

The report came as the Fed is contemplating whether to raise the key interest rates in December.

In her first public comments since the Fed’s meeting last week, Yellen’s tone was upbeat as she said in a House testimony on Wednesday that the U.S. economy is “performing well” and a rate lift-off was a “live possibility” if economic data justifies it.

Gold is about $30 shy of a 5-1/2-year trough of $1,077 hit in July. The euro cost $1.0887, up slightly from $1.0871.

“Yellen’s comments are a continuation of what we learned last week, that the Fed is really trying to keep that December option alive”, said George Goncalves, head of U.S. rates strategy at Nomura Securities worldwide in New York.

The United States dollar index surged to a three-month high of 98.06 on Wednesday.

Any hint of an interest rate rise soon will be pounced on by the gold bears, who have already pushed the price of the metal down by a few US$50 an ounce in the past two weeks.

Currency analysts and traders say many speculative and longer-term players have weighed in this week behind another run higher for the dollar, after a stuttering performance over the past six months.

Crude oil fell $1.58, or 3.3 percent, to $46.32 a barrel, reversing after two days of gains.