HONG KONG: The battered dollar rose on Monday, Oct 18 to edge further away from a 10-month low on Friday, while a rally in Asian stocks paused as investors took some profits ahead of a widely expected easing in U.S. monetary policy.
Fed chief Ben Bernanke cemented expectations on Friday of more U.S. stimulus to lower unemployment and fend off deflation, prompting a reversal of trades that had been pushing the dollar lower and most Asian stocks higher for weeks.
The prospects of the Fed pumping billions of dollars into its economy has sparked huge capital flows into high-yielding emerging markets, pushing up their currencies and prompting some countries to take steps to control the inflows from destablising their economies. The Fed reviews policy Nov. 2-3.
Rising global currency tensions, pitting the developing world against the developed world, will be the focus of a meeting of G20 finance leaders in South Korea, starting on Friday.
Asian stocks outside Japan, which have rallied steadily since last August, fell 0.9 percent on Monday.
Taiwan led the decline, falling 1.3 percent, on concerns that a rise in the local currency against the U.S. dollar could damage the island's major TECHNOLOGY [] exporters.
"The key concern is still the appreciation of the Taiwan dollar, so most technology shares weakened," said Tom Tang, a vice president at Masterlink Investment Advisory.
Japanese shares rose, however. The Nikkei average gained 0.5 percent, drawing some support from strength on the U.S. Nasdaq following blow-out third-quarter results from internet search giant Google.
Traders were reluctant to take large fresh positions though with short-term players mostly taking cues from movements in the yen, which stayed close to a 15-year high against the dollar.
"The Nikkei rebounded on short-covering after last week's loss but the market is having difficulty finding a clear direction without any new incentives," said Nagayuki Yamagishi, strategist at Mitsubishi UFJ Morgan Stanley Securities.
The yen inched up to 81.35 against the dollar, holding near the 15-year high of 80.88 reached last week.
The dollar index rose 0.4 percent, as traders pared short-positions and as investors bet the Fed would be successful in generating more inflation. The index is still down more than 6 percent following a selloff since a September high.
The rebound in the dollar pulled metal prices lower in Asian with spot gold down over 0.7 percent and silver trading about 2 percent lower.
The weakening trend in the dollar had drawn funds to commodities and had propelled gold to a record high last week. - Reuters
Fed chief Ben Bernanke cemented expectations on Friday of more U.S. stimulus to lower unemployment and fend off deflation, prompting a reversal of trades that had been pushing the dollar lower and most Asian stocks higher for weeks.
The prospects of the Fed pumping billions of dollars into its economy has sparked huge capital flows into high-yielding emerging markets, pushing up their currencies and prompting some countries to take steps to control the inflows from destablising their economies. The Fed reviews policy Nov. 2-3.
Rising global currency tensions, pitting the developing world against the developed world, will be the focus of a meeting of G20 finance leaders in South Korea, starting on Friday.
Asian stocks outside Japan, which have rallied steadily since last August, fell 0.9 percent on Monday.
Taiwan led the decline, falling 1.3 percent, on concerns that a rise in the local currency against the U.S. dollar could damage the island's major TECHNOLOGY [] exporters.
"The key concern is still the appreciation of the Taiwan dollar, so most technology shares weakened," said Tom Tang, a vice president at Masterlink Investment Advisory.
Japanese shares rose, however. The Nikkei average gained 0.5 percent, drawing some support from strength on the U.S. Nasdaq following blow-out third-quarter results from internet search giant Google.
Traders were reluctant to take large fresh positions though with short-term players mostly taking cues from movements in the yen, which stayed close to a 15-year high against the dollar.
"The Nikkei rebounded on short-covering after last week's loss but the market is having difficulty finding a clear direction without any new incentives," said Nagayuki Yamagishi, strategist at Mitsubishi UFJ Morgan Stanley Securities.
The yen inched up to 81.35 against the dollar, holding near the 15-year high of 80.88 reached last week.
The dollar index rose 0.4 percent, as traders pared short-positions and as investors bet the Fed would be successful in generating more inflation. The index is still down more than 6 percent following a selloff since a September high.
The rebound in the dollar pulled metal prices lower in Asian with spot gold down over 0.7 percent and silver trading about 2 percent lower.
The weakening trend in the dollar had drawn funds to commodities and had propelled gold to a record high last week. - Reuters
No comments:
Post a Comment