HONG KONG (China): The dollar rallied against high-yielding currencies and cemented gains versus its major peers as dealers took a delivery by Federal Reserve boss Janet Yellen as a hint that US mortgage rates will rise further this year.
However, while forex traders are bullish about the greenback, pushing Japanese stocks higher, most Asian traders are moving cautiously before Donald Trump’s inauguration on Friday.
In the two months after Trump’s November election win the dollar soared against any other currencies on expectations his big-spending, tax-cutting plans will fan growth, ramp up inflation and force the Fed to lift borrowing costs.
But an evergrowing uncertainty in past times fourteen days, compounded by a deficit of policy detail in the president-elect, have sent investors scurrying out of the home of america unit until they see indication of firm plans.
However, Yellen breathed life back into the greenback Wednesday by using a speech by which she said us states economy was meeting the central bank’s inflation and employment goals, and was confident it could push on.
“Yellen\’s comments reinforced what it\’s all about we\’ve been getting using Fed speakers that your economy is already strong before incorporating any stimulus from Trumponomics,” said Greg McKenna, chief market strategist at FX and CFD provider AxiTrader.
No rosy picture
The dollar was virtually flat resistant to the yen, euro and pound on a daily basis after surging around 1% against each.
However, it jumped almost 1% contrary to the South Korean won, 0.6% against the Australian dollar and 1.4% on Canada’s dollar. The Malaysian ringgit was down 0.2%, as was Indonesia’s rupiah.
On equity markets Tokyo’s Nikkei finished the morning 0.9% higher as exporters were lifted with the weakening yen. Sydney edged up 0.2% while Seoul shed 0.2%.
Hong Kong lost 0. % and Shanghai was flat.
Investors are watching for Trump’s post-inauguration speech hoping he may provide some colour to his campaign promises even though there are concerns among many Asian markets about his protectionist rhetoric.
“As you move the inauguration is dominating headlines, simmering to the side would be the overriding theme of US protectionism, expressly geared towards China,” Stephen Innes, senior trader at OANDA, said inside a note.
“Considering the variety of prominent trade hawks joining the Trump administration, all of it points to an enormous shift in US trade policy. It does not necessarily paint a rosy picture for regional … exporters, nor countries like Australia, which play this kind of vital role from the global supply chain.”