US Interest Rate Unchanged at 0.5%

The Fed left the target range for its interest rate unchanged at 0.5 percent for the fifth time during its July 2016 meeting. Policymakers said that the strengthening of the labour market and decreasing near-term risks to growth may suggest a rate hike is still possible this year, depending on incoming economic data.

“We continue to expect the next tightening move to be in December. That said, the wording does not preclude a move in September; a lot can happen in eight weeks,” Jim O’Sullivan, chief US economist at High-Frequency Economics wrote in a note to investors.

The only member of the FOMC who has a different opinion was Esther George, president of the Kansas City Fed. George has been advocating for higher interest rates for some time, but voted to keep them unchanged in June after disappointing jobs report in May.

“Job gains were strong in June following weak growth in May. On balance, payrolls and other labour market indicators point to some increase in labour utilisation in recent months,” the US central bank said.

Market Snapshot



Equity Markets: Top performers: India, France, Europe. Worst performers: Hong Kong China H-Shares, South Africa, Japan.

Opening Wrap: Shanghai fell 0.6 percent after shedding 1.9 percent the previous day. The Nikkei lost 1.1 percent to 16,488.74 in midmorning trade.  The broader Topix fell 1.3 percent to 1,304.58, with all of its 33 subsectors in negative territory. The JPX-Nikkei Index 400 was down 1.3 percent to 11,738.32. The S&P 500  ended down 0.12 percent at 2,166.58 and the Nasdaq Composite added 0.58 percent to 5,139.81. Six of the 10 major S&P sectors fell, led by a 1.44-percent fall in the consumer staples index followed by a 1.17 percent decline in utilities.

Currency Markets : Top performers: EUR/GBP, AUD/USD, CHF/GBP. Worst performers: USD/JPY, GBP/AUD, GBP/JPY.

Opening Wrap: The dollar skidded 0.5 percent to 104.92 yen, while the euro was 0.3 percent lower at 116.19 yen ahead of the BOJ's two-day policy meeting that begins on Thursday. The euro edged 0.1 percent higher to $1.1073. The Australian dollar was up 0.4 percent at $0.7519, taking back some lost ground after falling in the previous session. The dollar index fell 0.5 percent to 96.589.

Commodities Markets: Top performers: Wheat, Copper, Platinium. Worst performers: Crude Oil (WTI), Gold, Cotton.

Opening Wrap: International Brent crude oil futures were trading at $43.61, up 14 cents from their previous close. U.S. West Texas Intermediate crude was at $42.06, up 14 cents. Spot gold eased a bit to $1,338.56 an ounce. Palladium rose to a session high of $706.60 an ounce, its best since Oct. 12. Platinum hit a fresh 14-month high on Thursday and was up 0.4 percent at $1,137.60 an ounce. Silver was down 0.5 percent to $20.23 per ounce.

Treasuries: Top performers: EuroBuxi, UK Glitz. Worst performers: US T-Bond,Euro Bund.

Opening Wrap: Benchmark 10-year Treasury notes were up 12/32 in price for a yield of 1.520 percent, down 4 basis points from late on Tuesday, while the 30-year bond was up 1-1/32 in price to yield 2.234 percent, down nearly 5 basis points. The two-year Treasury yield fell 3 basis points to 0.734 percent.