Investing.com - The dollar gained further against the yen and Aussie in Asia on Monday as remarks from Fed Chiar Janet Yelllen at the end of last week were parsed as consistent with earlier language suggesting that any rate hike would be data dependent with the economy getting stronger, setting up nonfarm payrolls at the end of the week as key for the September meeting.
USD/JPY changed hands at 102.10, up 0.29%, while AUD/USD changed hands at 0.7551, down 0.17%.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last quoted down 0.02% to 95.46.
In China the USD/CNY fell to its lowest in over a month as the yuan traded around 6.6748 against the greenback compared with the official closing price of 6.6688 on Friday, thes weakest since the official close of 6.6766 on July 26. At the weekend, China's National Development and Reform Commission made loud and clear the current bank deposit reserve ratio is too high and that there is significant room for long-term bond yields to decline.
"The current deposit reserve ratio of 16.5% is relatively high both compared with historical levels and to other countries. The benchmark deposit
rate is not near a zero interest rate either. Maintaining a reasonably ample liquidity level and creating a reasonably accommodative monetary environment will help guide market interest rates lower," said Cao Yujin, a NDRC researcher who wrote the article, published in the news section of the NDRC website.
In the coming week in China data on the country's manufacturing sector are on the calendar, amid ongoing concerns over the health of the world's second biggest economy and in the U.K., traders will be awaiting reports on activity in the manufacturing and construction sectors for further indications on the continued effect that the Brexit decision is having on the economy. Markets in the U.K. are closed on Monday for a national holiday.
Overnight, the U.S. dollar skyrocketed against a basket of major currencies on Friday, following comments from two top Federal Reserve officials that hinted at a potential U.S. interest rate hike as early as next month.
During a much-awaited speech at the Fed's Jackson Hole symposium Friday, Yellen said the case for U.S. interest rate hikes has “strengthened” in recent months due to improvements in the labor market and to expectations for solid economic growth.
However, she did not indicate when the Fed would act, saying that higher interest rates will depend on incoming economic data.
Speaking shortly afterwards, Fed Vice Chair Stanley Fischer said Yellen’s speech was “consistent” with expectations for possibly two more rate hikes this year, opening the door to a September hike. Fischer, the Fed's No. 2 policymaker, said the Labor Department's jobs report for August will likely weigh on the decision over a hike.
For the week, the index rose 1.12%, as investors began to price in a greater likelihood that the Fed will raise rates this year.
According to Investing.com's Fed Rate Monitor Tool, investors are pricing in a 33% chance of a rate hike by September.