Federal Reserve System may raise discount rate
The index closed 0.6% higher.
“I continue to believe that it will be appropriate to gradually reduce the degree of monetary policy accommodation, provided that labor market conditions strengthen further and inflation continues to make progress toward our 2% objective”, Yellen concluded.
The chair of the Federal Reserve Janet Yellen has said a United Kingdom vote to leave the European Union could have “significant economic repercussions” in the USA and will affect the Fed’s decision to raise interest rates.
Oil prices have stopped falling, and the dollar has stopped rising - good signs for higher inflation.
Some analysts hold that the reason for her current prudent remarks might be found in the recent disappointing job data. The Dow Jones industrial average gained 0.6 percent to 17,920.33.
THE QUOTE: The dollar plunged following Friday’s jobs report as investors concluded that the Fed won’t raise interest rates any time soon. Higher home prices have lifted household wealth. Holdings in the world’s largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, fell 0.03 percent to 881.15 tonnes on Monday.
Meanwhile, world stocks advanced while the US dollar .DXY was near a four-week low against a basket of currencies. That’s causing a lot of pain for energy companies. Its stock gave up $4.05, or 14 percent, to $24.80. One-month volatility rose above 22 percent, highest level since early 2009. While the U.S. dollar basket is flat since Friday’s drop, it could be in a holding pattern pause (bearish flag?) before another down leg that could help the commodities space and miners with another leg higher. The retailer’s stock fell $2.20, or 2.3 percent, to $94.13.
On Monday gold for delivery in August traded within the range of $1,240.00-$1,248.55. Silver rose 8 cents to $16.45 an ounce. Natural gas rose 7 cents, or 2.8 percent, to $2.47 per 1,000 cubic feet.
In spite of the upbeat mood, investors said volatility could increase in the near term as Britain prepares for what looks like a close vote on June 23 over whether to leave the European Union. The British pound weakened based on the latest polls. Germany’s DAX jumped 1.9 percent to 10,307.93 while France’s CAC 40 rose 1.4 percent to 4,485.76. Hong Kong’s Hang Seng Index advanced 1.4 percent.
FTSE 100 called to open +15pts at 6290, still in its recovery uptrend from Friday’s lows and probing north again for a second attempt at 6300.
“Although prices could still work a bit higher from here over the course of the month, we think values will be hard pressed to push above the $1,275 range over the course of June”, said INTL FCStone analyst Edward Meir.
A currency trader watches computer monitors near screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rates between the USA dollar and South Korean won, second from left, at the foreign.