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    Asian Session – Yellen says December rate rise “live possibility”; dollar up

    US Fed Chair Janet Yellen signalled the Fed is ready to raise rates at its December meeting if the incoming information until then is supportive enough. Speaking before the House Financial Services Committee on Wednesday, Yellen said the US economy is expected to continue to grow at a sufficient pace to allow the Fed to meet its dual mandate and that December would be a “live possibility” if the data until then meets this expectation. However, she added that no decision has been made.

    The dollar jumped to 121.71 yen soon after the remarks and had eased to 121.38 yen today in early Asian trading before firming to 121.64 yen in late session. The yen was unfazed by the Bank of Japan’s latest meeting minutes which provided no clear signals on the possibility of further monetary stimulus. The Bank’s policymakers expressed concern on the impact of China’s slowdown on Japanese exports if the downturn lasts longer than expected. However, the Bank remained upbeat on the likelihood of meeting its inflation target.

    The euro continued to come under pressure on the growing monetary policy divergence between the Fed and the ECB. The single currency broke below the 1.09 handle on Wednesday and declined further to 3½-month lows against the dollar in today’s Asian session on weak German data. It was last trading at 1.0840 against the greenback and at 0.7045 against the pound.

    German factory orders fell more than expected in September, declining for the third straight month. Factory orders were down by 1.7% month-on-month, below estimates that they would rise by 1.0%.

    The Australian dollar could not sustain yesterday’s earlier gains against the greenback and fell back in US session, reaching a low of 0.7125 on Thursday. Positive comments on Australia’s economy by RBA Governor Glenn Stevens had little impact on the aussie. Stevens said that the Australian economy was making progress in rebalancing away from mining exports and the non-mining sector had seen good growth in employment.

    The kiwi meanwhile continued to trade near one-month lows against the dollar and last stood at 0.6585 in late Asian session.

    The pound fell below 1.54 dollars on strong ADP employment and ISM non-manufacturing figures from the US on Wednesday. It was steady in today’s Asian trading as investors look to the Bank of England’s policy minutes and inflation report later in the day for direction. The releases will be followed by a press conference by the Bank’s Governor Mark Carney at 12:45 GMT.

    Also to watch out for today are Eurozone retail sales and US weekly jobless claims. Upcoming speeches later in the day by Fed officials including Fischer, Lockhart and Tarullo are also likely to attract some attention.

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