Patrick Harker, head of the Philadelphia Fed, indicated that the economy in the US is weakening faster than thought and inflation is also falling faster than expected. At the same time, he stressed that the economy overall remains remarkably resilient anyway. The banker joined the group that advocates maintaining interest rates and watching incoming data closely. The market is virtually assured that rates will not rise in November. Bank of America has also postponed expectations of a November hike until December. According to Harker, now is the time to keep interest rates unchanged, and the Fed cannot afford to increase inflation.
Contracts on the dollar index (USDIDX) erased much of the gains but still hold an upward trend line, with the dollar being helped by risk aversion related to the situation in the Middle East. With uncertainty in the Middle East region, the Turkish index retreated nearly 3% today and is having its weakest week since May. At the same time China has indicated that it is forced to adopt maritime and air countermeasures in the face of 'increasing provocations from the US. Chinese defence ministry urged US 'to stop any provocative actions and undermine regional peace'. The US report cited by AP claims that China is building up its nuclear arsenal faster than previous projections.
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Source: xStation5
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