Published: Sat, May 05, 2018
Finance | By Kristine Clayton

Silver Price Rises After Dovish Fed Remarks

Silver Price Rises After Dovish Fed Remarks

Year-over-year inflation hit the Federal Reserve's 2% target for the first time in over a year in March, a sign of strengthening USA inflation pressures that could encourage the Fed to continue lifting interest rates this year. Most analysts anticipate two or three more hikes this year, and the Fed has five remaining meetings (June 12-13, July 31-August 1, September 25-26, November 7-8, and December 18-19) to hit that target.

Comments from the Fed were "possibly disappointing for dollar bulls", but the main reason for the euro's resilience on Thursday was profit-taking after the dollar's rapid move higher, said Jane Foley, currencies strategist at Rabobank. The Dow slumped 174.07 points or 0.7 percent to 23,924.98, the Nasdaq fell 29.81 points or 0.4 percent to 7,100.90 and the S&P 500 slid 19.13 points or 0.7 percent to 2,635.67.

The U.S. economy added fewer jobs than expected and although the unemployment rate dropped to near a 17-1/2-year low of 3.9 percent, this was because some jobless Americans left the labour force.

The extra use of the word "symmetric" follows Monday's data release showing the central bank's preferred gauge of inflation had hit its 2 per cent target after being below that goal in nearly every month since April 2012.

The Fed's latest "dot plot" now forecasts another two rate rises this year, although some analysts see three increases as possible. Again, the Easter effect is partly to blame, with services price inflation falling to just 1.0% year over year from 1.5% year over year in the previous month and against that background our medium term inflation outlook has not changed and we don't expect the central bank to scrap the intended exit from QE.

In the oil market, U.S. crude rose 68 cents to settle at $67.93 a barrel, while Brent gained 23 cents to settle at $73.36. Risks to the economic outlook appear roughly balanced. We think this further reinforces the case for rates not be hiked at next week's MPC meeting.

Excluding the volatile food and energy prices, the core PCE price index rose 1.9 percent in March, also the largest increase since February 2017.

- The Bloomberg Dollar Spot Index gained 0.3 percent. "If.wages come out a little bit stronger than expected, I think the euro tests $1.19", Innes said. But the greenback later reversed course to trade higher. The U.S. dollar was down to 0.9953 Swiss franc from 0.9964 Swiss franc, and it fell to 1.2830 Canadian dollars from 1.2848 Canadian dollars.

Considerable weakness was also visible among pharmaceutical stocks, as reflected by the 1.3 percent loss posted by the NYSE Arca Pharmaceutical Index.

Wall Street seesawed after the Federal Reserve stopped short of signalling a steeper path in interest rate increases.

Nonetheless, traders may be somewhat reluctant to make significant moves ahead of the release of the Labor Department's closely watched monthly jobs report on Friday.

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