Dol­lar firms, Asia stocks slip as US data, Fed com­ments awaited

The Pak Banker - - MARKETS/SPORTS -

The dol­lar firmed on Mon­day and most Asian mar­kets sur­ren­dered early gains as in­vestors cau­tiously awaited U.S. eco­nomic data and speeches by Fed­eral Re­serve of­fi­cials this week that could sig­nal more in­ter­est rate in­creases than ex­pected.

Euro­pean mar­kets are closed for the Easter Mon­day holiday. US stock futures ticked up 0.3 per­cent, al­though they re­main flat for the quar­ter. In the past week, the dol­lar has been helped by stronger-than-ex­pected gross do­mes­tic prod­uct data and com­ments from some Fed of­fi­cials in­di­cat­ing that pol­i­cy­mak­ers think they could raise in­ter­est rates as early as next month.

The dol­lar index against a bas­ket of six ma­jor cur­ren­cies rose as high as 96.339, its highest in al­most two weeks. It was last trad­ing up 0.1 per­cent at 96.273.

"Fed of­fi­cials gen­er­ally looked to share views that they need to main­tain a rate hike path given a U.S. re­cov­ery," said Jeong My-young, Sam­sung Futures' re­search head in Seoul. The dol­lar rose 0.4 per­cent to 113.51 yen, keep­ing in­tact its steady re­cov­ery from a 6-1/2-month low of 110.67 hit on March 17 af­ter a Fed­eral Re­serve meet­ing that left mar­kets con­vinced U.S. in­ter­est rates would not rise soon. The yen weak­ness gave Ja­pan's Nikkei a 0.8 per­cent boost to its highest close in two weeks. Ja­pan was the re­gion's sole win­ner. With share mar­kets in Aus­tralia, New Zealand and Hong Kong closed for hol­i­days, the MSCI's broad­est index of Asia-Pa­cific shares out­side Ja­pan was down 0.1 per­cent.

Shares in Korea ended the day lit­tle changed, and Tai­wan gave up ear­lier gains to close down 0.2 per­cent. Chi­nese stocks also re­versed course, with the Shang­hai Com­pos­ite index fall­ing 0.3 per­cent and the CSI 300 los­ing 0.4 per­cent.

In­done­sia, Sin­ga­pore, Malaysia and the Philip­pines all ex­tended losses, trad­ing be­tween 0.3 per­cent and 1.2 per­cent lower. US GDP in­creased at a 1.4 per­cent an­nual rate in Oct-Dec, above the pre­vi­ously re­ported 1.0 per­cent pace, driven by fairly strong con­sumer spend­ing, the third GDP es­ti­mate showed on Fri­day.

US PCE in­fla­tion data due at 1230 GMT could fur­ther fan ex­pec­ta­tions of an early rate move if it shows in­creas­ing in­fla­tion­ary pres­sure.

"The PCE in­fla­tion has been ris­ing of late. The Fed has said the prices will be the key in de­ter­min­ing pol­icy so the data should at­tract a lot of at­ten­tion," said Masahiro Ichikawa, se­nior strate­gist at Su­mit­omo Mit­sui As­set Man­age­ment. The an­nual core PCE in­fla­tion rose 1.7 per­cent in Jan­uary, the fastest pace since July 2014. The data will be fol­lowed by a speech from Fed­eral Re­serve Chair Janet Yellen and a few other Fed pol­i­cy­mak­ers on Tues­day, mak­ing the Fed's pol­icy the big­gest fo­cus for now.

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