US Federal Reserve plans rate hike this month: Evercore ISI

China’s stability itself may play a role in an accelerated schedule of Fed rate increases – look no further than the Wednesday speech by board member Lael Brainard. He said he continues to hear reports of brightening sentiment from businesses in his Fed district, but has yet to see that result in “meaningfully improved business activity”.

Sterling fell 0.25% to $1.2259, the lowest level in six weeks against the dollar, and was also struggling against the euro, trading at €1.1662, only marginally above the previous session’s low of €1.1656, which was the lowest level since 6 February. The dollar chipped away at this level for most of the afternoon before finally breaking through and peaking at 114.58 just as equities slipped to their session lows.

How long the stability in markets – especially in the emerging economies that have historically been vulnerable to capital outflows when USA rates rise – can last may continue to rely on China. The Aussie was trading at 1.0717 versus the NZ dollar.

US stocks touched new record highs on Wednesday as talk of a pending rate hike overshadowed Trump’s address to Congress on Tuesday night. Two FOMC members, specifically William Dudley and John Williams of the NY and San Francisco branches of the Fed, respectively, have both recently touted hawkish rhetoric. He is the third ranking member at the Fed behind Chair Janet Yellen and Vice Chair Stanley Fischer.

“Fairly soon means in the relatively near future”, he said without providing any hint of a timeline.

“They’d like to see well over 50 percent for them to move”, Evercore ISI chairman Ed Hyman said of Fed policymakers on the Bloomberg Surveillance TV program on Tuesday.

According to the CME’s Fed Watch tool, the odds of one stood at 77.5% as of 1330 GMT, up from 66.4% on the day before.

“Not only is March now on the table, in many people’s eyes it’s the base case scenario which is a massive change from even a week ago”, said Craig Erlam, senior market analyst at OANDA”.

Overall risks to the outlook were the closest to balance that they have been for some time according to Brainard and, assuming continued progress, a rate hike will likely to be appropriate soon. Tokyo shares were buoyed by the dollar’s gain against the Japanese yen.

The February employment report on March 10 will add evidence the USA economy is expanding just as policy makers prepare to meet, he said. It last traded up 1.5 per cent, in line with a rise in the FTSEurofirst 300 index.

Overnight, U.S. stocks fell from record highs to clock their biggest single-day loss since January 30, as financials succumbed to profit taking after recent sharp gains and reports suggested that federal agents have raided three Caterpillar Inc. facilities as part of a criminal probe into tax irregularities.

The Fed boosted its key policy rate by a quarter-point to a new range of 0.5 percent to 0.75 percent at its December meeting and indicated it expected to raise rates three times in 2017, which would be a pick-up from the one-hike-per-year pace of the past two years.