SINGAPORE: The U.S. dollar rose marginally on Wednesday, Nov 10 to hit its highest levels since late October against a basket of major currencies as the euro extended its losses over worries about euro zone sovereign debt.
Leading European shares fell 0.4 percent in early trade, in step with main Asian markets and Wall Street, after touching 2-year highs in the previous session, while gold and silver inched up again after pulling back from record highs reached on Tuesday.
The dollar's strength boosted exporters in Japan, helping to push the Nikkei average up to a four-month high, but stock markets in Hong Kong and China fell after China raised bank reserve requirements. The move by China's central bank fuelled worries authorities there may further try to cool the growth on which the world economy depends.
The dollar gained as U.S. Treasury bond yields rose, with the impact of the currency move felt across asset classes. The dollar index rose as high as 77.88, a level it last touched in late October.
"The dollar has gained some traction," said Mitul Kotecha, global head of FX strategy at Credit Agricole CIB in Hong Kong. "It seems like a credible bounce back. I don't see it going too far but it shows you how short the market was."
The market will look closely at an auction for long-dated Treasury bonds later on Wednesday, which could give clues to the greenback's direction, traders said.
The euro fell around 1 percent to $1.3775, with concerns about the cost of protection against Irish and Portuguese government debt continuing to weigh on sentiment.
Currency tensions are high on the agenda at this week's G20 summit of advanced and developing economies.
A planning meeting in Seoul on Tuesday on key issues, including exchange rates, ended inconclusively. Another session is scheduled for Wednesday.
Asian stocks, which followed Wall Street to fall for a second day, set a bearish tone for European markets. The MSCI index of Asian shares outside of Japan fell 0.7 percent.
However, the dollar boosted Japan's Nikkei average as exporters were among the chief beneficiaries of the currency's rise. The Nikkei firmed 1.4 percent to close at 9,830.5 after trading earlier as high as 9,842, its highest level since June.
Japanese banks also pushed the Nikkei higher on hopes they would not be the main focus of global regulators because of their domestic focus. Mizuho Financial Group soared 7.6 percent.
Japan's stock market has struggled to break decisively through 9,800 point level, but traders said a clear move beyond resistance at 9,807 may signal the start of a more sustained rally.
"The July peak had formed resistance for the Nikkei, and if it manages to end the day above the level, more gains will clearly be in order," said Koichi Nosaka, a market analyst at Securities Japan, Inc.
The firmer dollar weighed on dollar-denominated commodities.
Gold traded around $1,400 per ounce, a slight uptick after losing $30 from the record high of $1,424.10 on Tuesday.
Spot silver, which hit a record of $30 per ounce on Tuesday, also partially recovered from a selloff, trading around $27.50 per ounce.
U.S. crude futures slipped 21 cents to $86.51 per barrel, backing off a two-year high on Tuesday. - Reuters
Leading European shares fell 0.4 percent in early trade, in step with main Asian markets and Wall Street, after touching 2-year highs in the previous session, while gold and silver inched up again after pulling back from record highs reached on Tuesday.
The dollar's strength boosted exporters in Japan, helping to push the Nikkei average up to a four-month high, but stock markets in Hong Kong and China fell after China raised bank reserve requirements. The move by China's central bank fuelled worries authorities there may further try to cool the growth on which the world economy depends.
The dollar gained as U.S. Treasury bond yields rose, with the impact of the currency move felt across asset classes. The dollar index rose as high as 77.88, a level it last touched in late October.
"The dollar has gained some traction," said Mitul Kotecha, global head of FX strategy at Credit Agricole CIB in Hong Kong. "It seems like a credible bounce back. I don't see it going too far but it shows you how short the market was."
The market will look closely at an auction for long-dated Treasury bonds later on Wednesday, which could give clues to the greenback's direction, traders said.
The euro fell around 1 percent to $1.3775, with concerns about the cost of protection against Irish and Portuguese government debt continuing to weigh on sentiment.
Currency tensions are high on the agenda at this week's G20 summit of advanced and developing economies.
A planning meeting in Seoul on Tuesday on key issues, including exchange rates, ended inconclusively. Another session is scheduled for Wednesday.
Asian stocks, which followed Wall Street to fall for a second day, set a bearish tone for European markets. The MSCI index of Asian shares outside of Japan fell 0.7 percent.
However, the dollar boosted Japan's Nikkei average as exporters were among the chief beneficiaries of the currency's rise. The Nikkei firmed 1.4 percent to close at 9,830.5 after trading earlier as high as 9,842, its highest level since June.
Japanese banks also pushed the Nikkei higher on hopes they would not be the main focus of global regulators because of their domestic focus. Mizuho Financial Group soared 7.6 percent.
Japan's stock market has struggled to break decisively through 9,800 point level, but traders said a clear move beyond resistance at 9,807 may signal the start of a more sustained rally.
"The July peak had formed resistance for the Nikkei, and if it manages to end the day above the level, more gains will clearly be in order," said Koichi Nosaka, a market analyst at Securities Japan, Inc.
The firmer dollar weighed on dollar-denominated commodities.
Gold traded around $1,400 per ounce, a slight uptick after losing $30 from the record high of $1,424.10 on Tuesday.
Spot silver, which hit a record of $30 per ounce on Tuesday, also partially recovered from a selloff, trading around $27.50 per ounce.
U.S. crude futures slipped 21 cents to $86.51 per barrel, backing off a two-year high on Tuesday. - Reuters
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