Producers of metals and other raw materials rose as the dollar weakened against rival currencies.
The unwinding of the “yen carry trade” had caused a flight to safety in global markets in recent weeks that drove the value of the U.S. dollar higher. Now, the flight to safety is slowing and the yen is regaining its feet.
Dollar-sensitive gold futures topped $2530 an ounce, hitting new record highs. Global market volatility was driven by fears that the Federal Reserve would be unable to stop the onset of a recession, said one strategist. “The market was looking at a concern that the Fed was behind the curve,” said Quincy Krosby, chief global strategist at brokerage LPL Financial. “The concern was that they should have cut rates at the July meeting, and when that didn’t happen it transitioned to perhaps [they’ll be forced to] cut by 50 basis points at the September 18 meeting.”
Next week, investors will pore through comments due to be made by Fed Chairman Jerome Powell at the Jackson Hole, Wyo., central-bank conference, the strategist said. “They’re monitoring the words he uses: is he saying ‘we’re not as worried about inflation now, rather we are worried about the maximum employment mandate?’ Does he pivot with regard to the labor market?” Odds of a 50-basis-point cut could rise on the Fed funds futures markets in the wake of any commentary, and that will have ripple effects in currency and commodities markets, Krosby said.
Write to Rob Curran at [email protected]
(END) Dow Jones Newswires
08-16-24 1743ET
