US Fed hike rates for second time this year

US Fed hike rates for second time this year

Previously, Head of the Central Bank of Azerbaijan (CBA) Elman Rustamov said that increase in the key interest rate of the U.S. Federal Reserve System will not have a strong impact on the financial market of Azerbaijan and the manat rate. Japan’s benchmark slipped as the yen gained against the dollar.

In the spot market in Shanghai, the United States dollar was trading at 6.7936 yuan at 10.30am, up 0.03 per cent from 6.7917 late Wednesday.

The revision came just after the Fed raised interest rates Wednesday for the 2nd time in 3 months and said it would begin cutting its holdings of bonds and other securities this year, signaling its confidence in a growing U.S. economy and strengthening job market. The rise represents the third hike in six months and pushes the key rate to levels not seen since 2008.

The Federal Reserve, for its part, seems to believe that the economy is strong enough for money to be more expensive, including real estate financing.

In a separate report, the department announced that US import prices declined 0.3 percent in May after increasing 0.2 percent in April, while the price index for USA exports declined 0.7 percent in May following a 0.2-percent advance in April.

The Fed said the initial cap for Treasuries would be set at $6 billion per month initially and increase by $6 billion increments every three months over a 12-month period until it reached $30 billion per month in reductions to its holdings. The S&P ASX 200 in Australia tumbled 1.2 percent to 5,761.00.

In addition, the lack of progress on the USA economic policy agenda will also be a drag on the U.S. dollar through 2017, said Stephen Innes, senior trader at Oanda Asia Pacific.

The market had already anticipated a rate hike by Fed, as the Federal Reserves’ Chairman Janet Yellen had given many signals of a rate hike.

Fed futures markets now put the chances for another rate increase this year to below 50 per cent. USA yields dropped across the curve on Wednesday and the spread between two and ten-year yields shrank to the lowest levels in over a year.

Investors have been selling tech shares, which have led market gains this year.

U.S. DATA: The Commerce Department said retail spending decreased in May, surprising experts and prompting investors to buy traditionally safe assets like government bonds and high-dividend companies and sell stocks from other industries that depend more on economic growth.

Shortly after the opening bell, the Dow Jones Industrial Average fell 87.86 points, or 0.41 percent, to 21,286.70. The rate sets what banks can charge each other for overnight loans and influences the availability and flow of money in the US economy.

Brent crude, the worldwide benchmark, was down 12 cents a barrel at $46.88. It fell $1.73, or 3.7 per cent, to settle at $44.73 a barrel in NY. Brent crude, used to price global oils, fell 16 cents to $46.84 a barrel. “That is the main reason why the dollar is remaining supported for now”, said Manuel Oliveri, currency strategist at Credit Agricole in London.

The euro was also unchanged at $1.1217, below a seven-month peak of $1.1296 scaled overnight.

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