Dollar basks in yield glow, Nikkei at one-year peak

SYDNEY: The US dollar held near 14-year peaks yesterday as global yield spreads moved inexorably in its favour, while a falling yen lifted Japanese shares to a oneyear top.

The Nikkei added 0.3 per cent in thin trade, while Australia’s main index climbed 0.6 per cent to its highest in 17 months after Wall Street racked up more records.

Japan’s government upgraded its overall assessment of the economy on Wednesday, echoing a more upbeat view from the Bank of Japan’s delivered the day before.

The dollar revelled in its rapidly widening yield premium, with the Federal Reserve set on a tightening course even as its peers in Europe and Japan act to keep their short-term rates deep in negative territory.

The dollar index, which measures it against a basket of currencies, stood at 103.100 having touched 103.65, its highest since December 2002.

The US currency did run into scattered profit-taking as the session wore on which eased it back to 117.64 yen, but remained in sight of the recent peak at 118.66. The euro was a fraction firmer at US$1.0413.

On Wall Street, the Dow ended just 25 points shy of the magical 20,000 barrier helped by a 1.68 per cent gain in Goldman Sachs.

Stocks have been on a tear since the Nov 8 presidential election, with the Dow up 9 per cent and the S&P 500 6 per cent on bets that President-elect Donald Trump’s plans for deregulation and infrastructure spending might boost profits and growth.

The Dow rose 0.46 per cent on Tuesday, while the S&P 500 gained 0.36 per cent and the Nasdaq 0.49 per cent. — Reuters