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Fed talk spurs dollar gains, energy weighs on stocks 

March 24, 2016

Chuck Mikolajczak, Reuters

Global equity markets fell and the dollar advanced on Wednesday as hawkish comments by Federal Reserve officials put investors on guard for the possibility of more U.S. interest rate hikes this year than currently anticipated.

The dollar .DXY was up 0.47 percent against a basket of major currencies, headed towards its first weekly gain in four weeks.

Last week, U.S. central bank policymakers halved the number of rate hikes projected in 2016 to two, weakening expectations for a move at either the April or June policy meetings. Fed Chair Janet Yellen later told reporters "caution is appropriate" when it comes to raising rates.

But in the past two days, several Fed officials have expressed views that suggest an appetite for more hikes regardless of the volatility that has been the hallmark of financial markets this year.

"You can see the trade occurring, not necessarily that equities in and of themselves are worried about another quarter-point increase, but equities are worried about oil prices," said Keith Bliss, senior vice-president at Cuttone & Co in New York.

"You see the relationship as the Fed makes noises about going ahead and raising again in April, that is going to give a boost to the dollar which had been selling off, therefore higher dollar prices drag down oil prices." Read more

 
 
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