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Yields rise, dollar stumbles as Trump again criticizes Fed; stocks gain


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Yields rise, dollar stumbles as Trump again criticizes Fed; stocks gain

? Dollar down as Trump puts Fed in focus, again.

? Stock markets on the rise.

? Investors await latest Fed meeting minutes.

? Gold price jumps.

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The dollar lost its footing against most major currencies, while equity markets traded higher, as U.S. President Donald Trump renewed his criticism of Federal Reserve rate hikes.

The dollar spot index lost 0.36% just before 7 a.m. ET as Trump said he "should be given some help by the Fed," criticizing the central bank's rate hikes. The comments followed earlier reports from an Aug. 17 Republican fundraising event during which Trump said that when he appointed Jerome Powell as the new Fed chairman earlier this year, he did so in the belief that the central bank would continue keeping interest rates low.

Even before Trump's comments, emerging markets concerns, trade tensions and geopolitics have stoked the debate as to whether the Fed should revise its guidance," according to Michael Hewson, chief market analyst at CMC Markets UK. "The worry is that the president's interventions will make it much harder to have that debate, without accusations that the Fed is being manipulated."

"Investors do not mind if the Fed is criticized, just not by the president or the executive branch," Brown Brothers Harriman wrote.

The U.S. dollar "looks stretched against nearly all the G-10 currencies," TD Securities said. "Our cyclical valuation models show the [dollar] sits around 2% overvalued and positioning indicators argue it is a well-populated trade."

The euro appreciated 0.35% and sterling gained nearly 0.3% against the dollar as of 7:04 a.m. ET. The Japanese yen dipped 0.18%.

Ten-year U.S. Treasury yields added 3 basis points, to 2.846%, as of 7:06 a.m. ET, as investors await the latest Federal Open Market Committee meeting minutes due Aug. 22. Meanwhile, investors will also be watching out for Powell's speech Aug. 24 at the annual gathering of central bankers at Jackson Hole, Wyo.

"[W]e suspect that the message from these events will be that the Fed is likely to continue raising interest rates by 25 [basis points] once a quarter as the U.S. economy remains healthy," Capital Economics said in a research note. "We doubt that the strength of the dollar so far this year will deter the Fed."

The Euro Stoxx 50 advanced 0.72% and the FTSE 100 was down nearly 0.2% before 7 a.m. ET. Germany's and France's main indexes were trading more than 0.6% higher each. Earlier in Asia, the Shanghai Composite surged 1.31% and Hong Kong's Hang Seng index closed 0.56% higher.

U.S. and Chinese officials are set to meet Aug. 22 and Aug. 23 in Washington, D.C., to resume trade talks. However, Trump told Reuters that he does not expect much from this round of talks.

China and the U.S. are scheduled to impose 25% tariffs on $16 billion of each other's goods Aug. 23. A separate 25% tariff on $200 billion of Chinese goods is also being considered by the Trump administration.

The Chinese yuan appreciated nearly 0.2% against the dollar as of 7:06 a.m. ET.

The Australian dollar strengthened 0.26% as Prime Minister Malcolm Turnbull retained leadership of the Liberal Party, winning a vote against Peter Dutton, who later resigned as home affairs minister.

Futures point to the S&P 500 opening 0.18% higher and the NASDAQ adding 0.27%.

Brent crude oil edged up 0.24% to $72.38 per barrel on the ICE Futures Exchange. Gold added nearly 0.50%, to $1,200.50 per ounce.

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The day ahead:

8:55 a.m. ET — U.S. redbook

6:45 p.m. ET — New Zealand retail trade (Econoday consensus: 0.3% quarterly)