The dollar climbed during Wednesday’s Asian session following Tuesday’s comments from Richmond Federal Reserve President Jeffrey Lacker that solidified a strong possibility for an interest rate hike before the end of 2016. Lacker is not a voting member of the Fed, but he does participate in policy discussions. Lacker’s comments were solidified by Chicago Fed President Charles Evans who spoke on Wednesday in News Zealand, saying that he would be “fine” with a rate hike this year if data remains supported. According to the CME Group’s FedWatch tool, traders believe there is a 63 percent change of a Fed rate hike in December.
The British pound sunk to a 31-year low against the dollar, to $1.27, but UK Prime Minister Theresa May has publicly said that she is not worried, even though the UK’s separation from the European Union will not be “plain sailing.” The pound lost almost two percent in the past two trading days.
The dollar remained flat against the yen at 102.90, while oil remained immune to the dollar surge after a report suggested that U.S. inventories had fallen for the fifth straight week. U.S. crude futures gained about 1 percent to $49.14 while Brent crude added one percent to $51.30.
Gold Looks Less than Golden
The strong dollar added pressure to gold prices, with the precious metal sliding more than 3 percent on Tuesday night. "The sell-off which we are seeing for gold is mainly due to the reason that some Fed members have created noise again that November meeting could be live when it comes to the interest rate," Naeem Aslam, chief market analyst at Think Markets U.K., said in a Wednesday note. Gold did recoup some of its losses during Wednesday’s Asian session, gaining 0.3 percent to $1,272 an ounce.