The greenback increase to fresh two week peak against the other major currencies on Monday, supported by the release of positive US data and as new expectations for an approaching rate hike by the Fed Reserve sustained to help the dollar. Markets are less sure when USA policy might change after Fed Chair Janet Yellen on August 26 said the case for a rate increase was strengthening, but provided little detail on when it would next move.
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The yen was broadly weaker on Tuesday as the firmer dollar and fresh warnings of currency intervention by Japan’s chief government spokesman offset surprisingly strong data. Banks are still one of the worst-performing sectors in the market over the past year.
The premium for one-month options to buy the yen versus the dollar, over the cost of contracts to sell, tumbled to 0.1 percentage points, the least bullish since November, according to risk-reversal prices compiled by Bloomberg. Inpex Corp., which has a 87 percent weighting on a gauge tracking oil explorers, sank 3.1 percent, its biggest decline in a month. London was closed for a holiday.
Australian shares closed firmly in the red as a stronger dollar weighed on commodity-related stocks and central bank data showed domestic credit growth continued to slow in July. Hong Kong’s Hang Seng rose 0.8 percent to 23,000.57, while the Shanghai Composite inched up 0.1 percent to 3,073.78.
The dollar index, which tracks the greenback against a basket of six major counterparts, was flat at 96.012.DXY, remaining near its overnight top of 96.143, its highest since early August.
South Korea’s Kospi added 0.8 percent to 2,047.93 in early trading.
On Wall Street on Tuesday, markets logged losses, dragged down by shares of Apple Inc after antitrust regulators ordered the company to pay about US$14.5 billion in back taxes.
Gold miners Newcrest Mining, Evolution Mining, Northern Star Resources and Regis Resources lost 2-5 percent after gold prices hit two-month lows overnight on USA rate hike worries.
Friday’s USA jobs report is expected to show employers added 180,000 jobs in August, according to the median estimate of 89 economists polled by Reuters.
The odds of a 25 basis point rate increase in September fell to 36% on Tuesday after soaring to the low 40′s on Monday, as global investors debate whether the Federal Reserve is ready for tightening this month.
Friday’s U.S.jobs report is expected to show employers added 180,000 jobs in August, according to the median estimate of 89 economists polled by Reuters. The Tokyo market was an exception and gained on prospects for a strong dollar. Brent crude, used to price oil internationally, lost 78 cents to $49.37 a barrel.
Spot gold slid to a two-month low of $1,304.91 after the U.S.jobs data.
ENERGY: Benchmark U.S. crude oil fell 82 cents to $46.82 a barrel.
Figures out Monday showed the Fed preferred measure of core inflation stuck at 1.6 percent for a fifth straight month.
Spot gold edged up 0.1 per cent to US$1,311.66 an ounce after tumbling as low as US$1,308.65 on Tuesday, its lowest since late June, pressured by the stronger dollar and growing expectations of higher United States interest rates.
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Wells Fargo, the nation’s largest mortgage lender, rose $1.05, or 2.2 per cent, to $49.56 and JPMorgan Chase gained 73 cents, or 1.1 per cent, to $66.95.
