Dollar at one week high after hawkish Fed minutes; Asia stocks capped
MSCI broadest index of Asia-Pacific shares outside Japan fell 0.2 percent, while the Australian benchmark also dropped 0.2 percent.
Asian stocks were capped and the dollar rose to a one week-high in early Thursday trade after the minutes of the Federal Reserve`s latest meeting showed broad agreement among board members on the need to raise borrowing costs further.
The spectre of rising U.S. dollar yields, which along with global trade tensions were at the centre of last week`s global equities rout, kept riskier appetite in check in Asia.
MSCI broadest index of Asia-Pacific shares outside Japan fell 0.2 percent, while the Australian benchmark also dropped 0.2 percent.
Japan`s Nikkei average was flat, and appeared to struggle for headway. Data out earlier in the day showed exports from the world`s third-biggest economy dropped for the first time since late 2016, hit by declines in shipments to the United States and China.
The U.S. dollar index and Treasury yields rose to its highest levels in a week on Wednesday.
The dollar index, which measures its value against six major peers, last traded at 95.654, little changed on the day, while 10 year Treasury yield last stood at 3.211 percent, 3.2 basis points higher than the U.S. close.
The minutes from the Fed`s Septa 25-26 meeting showed every Fed policymaker backed raising interest rates last month and also generally agreed borrowing costs were set to rise further, despite U.S. President Donald Trump`s view that the tightenings have already gone too far.
Major currencies have shown limited reaction after the U.S. government late on Wednesday refrained from naming China or any other trading partner as a currency manipulator, as it leans on import tariffs to try to cut a trade deficit with China, soothing investor sentiment in Asia.
Watch Zee Business video here:
In its semi-annual currency report, the U.S. Treasury Department said a recent depreciation of China`s yuan currency will likely exacerbate the U.S. trade deficit, but U.S. officials found Beijing appeared to be doing little to directly intervene in the currency`s value.
The yuan was steady at 6.9315 per dollar
But some investors remain wary of a slide towards the psychologically important level of 7 to the dollar.
"With U.S. Treasury yields beginning to creep higher again, President Trump hinting at further tariffs on Chinese goods and the CSI 300 trading at close to its lowest level since the summer of 2016, the continued risk of a fresh bout of weakness (in the yuan) cannot be ignored," said Simon Derrick, chief currency strategist at BNY Mellon.
In Europe, the European Council meeting kicked off on Wednesday with a roundtable dinner, with British Prime Minister Theresa May`s address ahead of it, though expectations that anything substantial will come out of it have already been fading.
"Hopes for Brexit deal has supported the pound for the past two months. So if there`s no meaningful development, other than longer transition period, the pound could come under short-term selling pressure," said Tohru Sasaki, head of markets research at JPMorgan Chase Bank in Tokyo.
Oil prices fell on Wednesday, with U.S. futures settling below $70 a barrel for the first time in a month, after U.S. crude stockpiles rose 6.5 million barrels, almost triple what analysts had forecast, while exports dropped.
The West Texas Intermediate crude futures
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Retirement Planning: SIP+SWP combination; Rs 15,000 monthly SIP for 25 years and then Rs 1,52,000 monthly income for 30 years
Top Gold ETF vs Top Large Cap Mutual Fund 10-year Return Calculator: Which has given higher return on Rs 11 lakh investment; see calculations
Retirement Calculator: 40 years of age, Rs 50,000 monthly expenses; what should be retirement corpus and monthly investment
SBI 444-day FD vs Union Bank of India 333-day FD: Know maturity amount on Rs 4 lakh and Rs 8 lakh investments for general and senior citizens
EPF vs SIP vs PPF Calculator: Rs 12,000 monthly investment for 30 years; which can create highest retirement corpus
Home loan EMI vs Mutual Fund SIP Calculator: Rs 70 lakh home loan EMI for 20 years or SIP equal to EMI for 10 years; which can be easier route to buy home; know maths
08:37 AM IST