- Omer Esiner, chief market analyst at the currency brokerage Commonwealth Foreign Exchange Inc
If the economy continues strengthening at a more rapid pace than Fed's policy makers estimate, interest rates could be lifted sooner than expected. This is the message markets received from the July FOMC meeting minutes. However, for now most Fed officials are not ready to signal an earlier-than-anticipated rate increase even despite the rapidly improving economy and labour market. The Fed moved closer to ending its bond-buying programme, but was blurred about its plans or schedule for raising interest rates. Fed officials are increasingly debating whether the economy's recent progress is sustainable and whether it could support an earlier rate hike. Short-term U.S. rates have been kept near zero since the depths of the financial crisis in December 2008. Most Fed officials believe they can wait until 2015 before hiking rates and have encouraged a perception in financial markets that rate increases will not start until the middle of the year. Now investors' attention turns to Fed Chairwoman Janet Yellen's speech on Friday at a central-bank symposium in Jackson Hole to get more hint on rate-hike timing.
The U.S. Dollar jumped against the Euro and Yen after minutes showed the central bank was gradually shifting its stance in a more hawkish direction. The U.S. Dollar gained 0.8% versus the Yen to 103.71, the highest level since April 4. The Euro lost 0.4% against the greenback to $1.3264, an 11-month low.
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