Rumours that the US Federal Reserve might not drop the phrase, ‘for a considerable time’ from its post meeting statement tomorrow morning, our time, saw the Aussie dollar rise to 91 cents, while Wall Street markets had a solid night.
Shares, gold and oil all rose as the US dollar fell.
That drop helped the Aussie dollar rise from around a low yesterday of 89.89 US cents to a high early this morning of 91.12.
The currency was trading around 90.90 in early Asian trading.
The gain trimmed the losses for the currency to three US cents, or around 3 and a bit per cent.
Reports in US business media claimed the Fed will not be dropping the phrase after the current meeting and could now wait until the next meeting late next month.
This was reported by the well-connected US journalist, Jon Hilsenrath, The Wall Street Journal’s chief economics correspondent.
He is regarded as the ‘Fed Wire’ because of his sources and the way his reports seem to accurately reflect Fed thinking and actions.
He wrote that the Federal Reserve is unlikely to remove dovish language from its policy statement.
The Fed has previously has said it will keep interest rates near zero for a “considerable time” after the central bank ends its stimulus measures. Getting rid of that phrase is widely considered a sign that the Fed is moving toward tighter monetary policy.
While Wall Street was up solidly this morning, the futures has our stockmarket starting with a solid 30 point gain after two days of losses so far this week.
Analysts here remain wary of the direction of iron ore prices – Monday’s gain wasn’t all that convincing for some investors.
The price dipped slightly overnight to $US84.50.
And news that China’s ban on imports of high ash, high sulphur thermal coal also worried investors who saw the news as big negative for the local coal sector.
The Dow rose 101 points or 0.6%, while the S&P 500 and the Nasdaq were both up 0.75%. The S&P 500 ended just under the 2,000 mark, again.
Gold rose $US1 to $US1,236 an ounce, while oil bounced by around $US1.80 in US markets to end at $US94.80 after the head of OPEC claimed the organisation might cut production if the current bout of weak prices continues.
Those comments also saw Brent oil in London rise $US1 to $US98 a barrel.
And those rises in turn saw the energy sector lead Wall Street higher.
But it was speculation about the wording of the post Fed meeting that grabbed attention and moved markets – for how long we will know in less than 24 hours.
The local market was battered lower yesterday for a second day and both lost half a per cent after Monday’s 1% drop.
The surprise rise in iron or prices saw BHP Billiton up 0.3 to $35.74, while main rival Rio Tinto added 0.2 to $61.8. Fortescue Metals Group was up $1 to $4.
Iron ore minors BC Iron and Atlas Iron were the best-performing stocks in the ASX 200, climbing 4.9% and 2.6% to $2.15 and 59¢ respectively.
But the market was dragged lower by losses among the big four banks and Telstra.
The Commonwealth Bank dropped 1% to $78.19, Westpac fell 0.8% to $33.50, the ANZ also fell 0.8%, closing on $32.12, and the National Australia Bank shed half a per cent to $33.64.
Telstra dropped 1.1% lower at $5.43.
Rare earths miner Lynas Corporation was the worst-performing stock in the ASX 200 for the second day running, dropping another 7.7% to just 12¢. It is struggling with a critical debt refinancing.
