US Dollar Holds Fed Inspired Gains

Asian markets are responding to Federal Reserve speeches and US data released on Friday. Asian markets were closed when Janet Yellen addressed the Jackson Hole symposium as well as Stanley Fischer 2^nd hawkish speech. Japan’s Nikkei climbed 2.3 percent, the biggest one-day gain in three weeks, as the yen weakened against the resurgent dollar. The surge in the US dollar helped the safe haven yen climb to 102.37 easing the burden on Japanese exporters. China’s  and Shanghai Composite both saw losses. Hong Kong’s Hang Seng eased 0.3 percent.

Wall Street closed slightly down after a volatile session on Friday, having moved between gains and losses as traders debated the likely timing of a U.S. interest rate hike following comments from top Federal Reserve officials.

The S&P 500 climbed after Yellen made the case for raising rates had strengthened but did not indicate when the Fed would act but gave traders an idea that rate increases would be later than soon. Yellen told bankers in Jackson Hole, the U.S. economy was nearing the central bank’s goals of maximum employment and price stability but that future hikes should be “gradual”.

Equities later traded lower after hawkish comments from Fed Vice Chair Stanley Fischer raised the possibility of a rate hike as soon as next month.  Fischer indicated that rate increases in September and December remained in play.

Reuters reported comments by the Fed’s No. 2 policymaker, Vice Chair Stanley Fischer, following Yellen’s speech also bolstered the case for a hike this year. Asked on CNBC whether a rate hike in September and more than one policy tightening before year-end should be expected, Fischer said Yellen’s comments were “consistent with answering yes” to both questions, albeit still data-dependent.

This increased the importance of the August nonfarm payroll report due on Friday. The NFP is expected to show that the economy created 180,000 jobs this month after rising by 255,000 in July, according to a Reuters poll. The forecast is for the unemployment rate to fall to 4.8%

Other data this week includes personal consumption on Monday, consumer confidence on Tuesday, and car sales and factory activity on Thursday. For more economic data this week.

The reaction to Yellen and Fischer were positive for the greenback. The dollar index which tracks the greenback against six global peers, jumping 0.8 percent on Friday. It held steady at 95.56 on Monday.

The dollar surged 1.3 percent against the yen to a two-week high, its biggest one-day advance in almost seven weeks. It extended those gains by 0.3 percent to 102.37 yen this morning.

Japanese traders will closely monitor household spending and retail sales data for July due on Tuesday. Investors are looking for some indication that Prime Minister Shinzo Abe’s massive Three Arrow plans are having an effect, after figures on Friday showed a decline in consumer prices by the most in three years in July.

The euro is trading flat at $1.1193 after tumbling 0.8 percent it regained most of its losses. The kiwi and the Aussie both dipped this morning on the strength of the US dollar. The AUD is trading at 0.7551 with the NZD at 0.7237