• The dollar extended its losses against the yen and hit a new 15-month low on Thursday, with market participants bracing for further near-term weakness in the U.S. currency.
The dollar dropped below Wednesday’s low of 106.725 yen and fell as far as 106.30 yen, its weakest level since November 2016. That marked a drop of 3.8 percent from its early February peak near 110.50 yen.
The U.S. currency later pared some of its losses and was last down 0.4 percent at 106.56 yen.
• In Thursday’s Asian trade, the euro edged up 0.1 percent to $1.2459, after gaining 0.8 percent on Wednesday. Sterling was steady at $1.4004, after also having risen 0.8 percent the previous day.
• The U.S. government was wrong to cut taxes at this stage of the business cycle given the economy is near full employment, but will nonetheless help lift growth this year and give the Federal Reserve more reason to raise rates, a Reuters poll of economists found.
Still, the Fed is likely to raise rates three times in 2018, in line with the central bank’s own projections, even though some U.S. policymakers are still worried about weak wage inflation and overall price pressures.
The consensus view in the poll was for the federal funds rate to go up in March by 25 basis points to 1.50-1.75 percent. The Fed is then expected to hike in the second and third quarters, taking rates to 2.00-2.25 percent by end-2018.
• Faster-than-expected inflation may complicate the task ahead for new Federal Reserve chief Jerome Powell, who chairs his first monetary policy-setting meeting next month.
The question is how the Fed, under Powell, will manage rising expectations in some quarters that the stronger inflation will require more aggressive monetary tightening.
So far Powell’s colleagues have signaled the central bank should stay on its course of gradual rate hikes, undeterred by recent market turbulence or fears about the impact the Trump administration’s tax and spending policies could have on inflation.
• The U.S. government was wrong to cut taxes at this stage of the business cycle given the economy is near full employment, but will nonetheless help lift growth this year and give the Federal Reserve more reason to raise rates, a Reuters poll of economists found.
Still, the Fed is likely to raise rates three times in 2018, in line with the central bank’s own projections, even though some U.S. policymakers are still worried about weak wage inflation and overall price pressures.
The consensus view in the poll was for the federal funds rate to go up in March by 25 basis points to 1.50-1.75 percent. The Fed is then expected to hike in the second and third quarters, taking rates to 2.00-2.25 percent by end-2018.
• Japan’s government will submit to parliament nominees for the central bank’s governor and deputy governors on Friday, sources with direct knowledge of the matter said on Thursday.
• Oil prices rose more than 1 percent on Thursday to extend gains from the previous session, lifted by a weak dollar and Saudi comments that it would rather see an undersupplied market than end a deal with OPEC and Russia to withhold production.
U.S. West Texas Intermediate (WTI) crude futures were up 84 cents, or 1.4 percent, from their last settlement at $61.44 a barrel at 0604 GMT, adding to a 2.4-percent gain from the day before.
Brent crude futures were at $65.05 per barrel, up 69 cents, or 1.1 percent, extending Wednesday’s 2.6-percent climb.
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