Economy

United States dollar declines as Fed meeting begins

United States dollar declines as Fed meeting begins”

A lower estimate of long-run unemployment could explain why low unemployment hasn't yet triggered higher inflation, and justify the Fed keeping rates low to run the economy a little hotter. The Standard & Poor's 500 index closed above 2,500 for the first time.

The Dow Jones Industrial Average .DJI rose 39.45 points, or 0.18 percent, to 22,370.8, clocking its sixth straight record close.

Analysts widely anticipate Fed policymakers to announce a lowering of monthly bond purchases, starting in October, when their two-day meeting ends on Wednesday.

While investors do not expect any rate hike as an outcome of the meeting, the central bank will likely announce that it will begin paring its massive portfolio of Treasuries and mortgage-backed securities, with the reductions expected to start this year. Earlier in the day, Carney said that the rise in interest rates would be slow and gradual. Investors will also be listening for any update on the timing of another increase to the Fed's key interest rate.

The Fed also reduced its benchmark interest rate to zero, and only began raising it in December 2015, seven years after the crisis. Economists have expected the next rate increase to come in December.

The Nikkei has gained almost 30 percent since Abe attained political power in late 2012. Western Digital slid $4.12, or 4.6 percent, to $85.80. Government data yesterday showed a smaller current account deficit than expected at 2.8 percent of GDP.

Investors will be listening for any hint of a shift in the central bank's interest rate plans or views on the US economy. It was possible that the figures were distorted by Hurricane Harvey that hit Texas during August. The Australian dollar rose to 0.8016 dollar from 0.8012 dollar. The report pulled down homebuilder shares.

But taxi operator ComfortDelGro fell as much as 5 percent after its unit SBS Transit lost the tender to operate the Thomson-East Coast line to competitor SMRT. General Mills' woes were weighing on other food companies. Its shares advanced 3 percent.

CIMB Group Holdings, Malaysia's second-largest bank by assets, declined 2.3% to 6.31 ringgit in Kuala Lumpur after Mitsubishi UFJ Financial Group sold its entire 4.6% stake in the lender.

BONDS: Bond prices rose.

Higher U.S. yields bolstered the greenback, with the benchmark 10-year note yield notching a one-month high of 2.237 percent overnight. The Nasdaq composite added 0.1 percent to 6,461.32. Brent crude, used to price global oils, rose 11 cents to $55.73 in London. The pickup in oil prices helped lift energy stocks.

The U.S. currency inched 0.1 percent lower against its Japanese counterpart to 111.45 yen, but remained within sight of an eight-week peak of 111.88 yen scaled overnight. The euro was at $1.1998-2002, up from $1.1993-1993, and at ¥133.66-66, down from ¥133.97-98.

MARKETS OVERSEAS: In Europe, Germany's DAX and the CAC 40 in France were both flat. The price index for import fuel increased 15.0% year over year, led by a 15.8% rise in petroleum and just a 0.1% gain in natural gas prices.

The most influential movers on the index also included Potash Corp of Saskatchewan (POT.TO), which gained 3.5 percent to C$23.59, and Agrium Inc (AGU.TO), which was up 3.6 percent to C$132.65.



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