· The U.S. dollar was on course for its biggest daily percentage decline against the safe-haven yen in more than three months on Tuesday on concern about North Korea’s largest nuclear test and a Federal Reserve official’s comments about low U.S. inflation.
The dollar index, which tracks the dollar against a basket of currencies, stood at 92.221, compared to the 92.6 handle seen earlier.
The dollar fell as much as 1 percent against the Japanese currency to 108.65 yen, its lowest since Aug. 29 after North Korea conducted its sixth and biggest nuclear test two days ago. The dollar was last set for its biggest daily drop against the yen since mid-May.
The euro gained as much as 0.4 percent to $1.1939 ahead of a European Central Bank policy meeting. That was still below a more than 2-1/2-year high of $1.2069 touched last week.
· Yields of the U.S. Treasurys were also lower. The yield of the 10-year Treasury note stood at 2.06 percent at the end of the U.S. trading day, around its lowest levels since Nov. 10. Bond yields move inversely to their prices.
· The Fed has raised rates twice this year. Investors have since grown sceptical and now give a December rate hike a 27 percent probability, down from 30 percent before Brainard spoke.
· Fed's Brainard Says Caution Warranted on Further Tightening
Federal Reserve Governor Lael Brainard said the U.S. central bank needs to pay careful attention to underlying inflation before raising interest rates again, as longer-run price pressure trends appear to be lower.
· Kashkari Says Fed May Have Harmed Economy With Rate Hikes
Federal Reserve interest-rate increases may be “doing real harm” to the U.S. economy, which would help explain why inflation is low and job growth has slowed, said Minneapolis Fed President Neel Kashkari, one of the central bank’s most dovish policy makers.
· Federal Reserve should be patient on rate hikes, says Kaplan
The Federal Reserve should not raise interest rates for the time being, a U.S. central banker said on Tuesday, joining a chorus of Fed policymakers advocating a wait-and-see approach on rate hikes with inflation as low as it is.
“I actually believe we should be patient here,” said Robert Kaplan, who runs the Dallas Federal Reserve Bank and who is one of nine current voters on Fed policy this year.
Kaplan repeated his view, widely shared among his colleagues, that the Fed should start to trim its $4.5 trillion as soon as possible so that it can ensure it has “dry powder” to deal with a future crisis and recessions when it comes along.
· President Donald Trump on Tuesday urged leaders of the U.S. Congress to make a big push on tax reform with tax cuts on individuals and companies and tax breaks for businesses to bring back profits from overseas.
· Crude oil prices rose and gasoline fell by about 3 percent on Tuesday as the gradual restart of refineries in the U.S. Gulf that were shut by Hurricane Harvey raised demand for crude and eased fears of a fuel supply crunch.
U.S. crude futures Clc1 settled up $1.37 at $48.66 per barrel after trading earlier in the day as high as $48.98, a three-week high.
Brent crude LCOc1 ended $1.04, or 2 percent, higher at $53.38 per barrel.
· Oil prices marched higher on Tuesday following reports indicating that Russia and Saudi Arabia are considering extending the oil production cut deal agreed between both OPEC and non-OPEC members once it expires in March 2018.
Reference: Bloomberg, Reuters, CNBC
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