Dollar/yen eases, on track for 0.7 pct weekly loss * Weak US data further reduce US rate hike prospects * Bounce in commodities after rough patch supports Aussie * Focus on BOJ and Fed policy meetings on Sept 20-21 (Updates prices, adds comments) By Masayuki Kitano and Shinichi Saoshiro SINGAPORE/TOKYO, Sept 16 (Reuters) – The dollar eased versus the yen on Friday, struggling to gain traction after lacklustre USA economic data further dampened already low expectations for a Federal Reserve interest rate hike next week.
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Japan’s central bank will also meet on Tuesday and Wednesday and present an assessment of its ultra-easy monetary policy.
It certainly won’t be that straightforward, but it is enough to have people questioning whether the 35-year bull market in bonds is over.
“The European Central Bank and Bank of Japan have acknowledged publicly that the compression in yield spreads from short to longer maturities has hurt bank profitability”. Helped by a small gain against the euro and a half percent fall in sterling, the dollar index which measures its broader strength was just up at 95.483.
Over the past five days, the S&P/ASX 200 Index has fallen two out of five days, beginning with a 119-point loss on Monday.
Still, the consensus view from over 100 economists polled by Reuters in the past week showed the fed funds target rate will rise to 0.50-0.75 percent in the fourth quarter, with a median 70 percent probability of a December move. Elsewhere, the Australian dollar inched up 0.1 percent to $0.7520 after posting a 0.7 percent gain on Thursday. The Nasdaq Composite climbed 1.47 percent to 5,249.69.
Estia Health’s chief executive and managing director Paul Gregersen is stepping down from his positions after the company missed its earnings guidance earlier this month.
The inflation data suggested a greater probability of a December move from the USA central bank and a quicker pace of rate increases next year, analysts said. The curve steepened following the “tantrum” and remained steep. In the 12 months through August, the CPI increased 1.1 percent after advancing 0.8 percent in July. “You feel better borrowing at a slightly higher rate, [it suggests] a bit more confidence”.
The S&P 500 dropped about 0.4 percent with financials and energy lagging. Palladium was down 0.6 percent at $653.30 an ounce. Fast Retailing is edging higher by 0.06 percent and SoftBank is up more than 2 percent.
Japanese banking and finance shares fell amid the uncertainty surrounding the BOJ, with Mitsubishi UFJ closing down 1.9%, SMFG off 1.9%, Mizuho down 1.6% and Nomura Holdings off by 2.2%.
Among the other major gainers, iPhone maker Apple’s suppliers Alps Electric and Japan Display are rising more than 4 percent and 11 percent respectively, while Olympus Corp and TDK Corp. are higher by more than 3 percent.
In currencies, the dollar was little changed at 102.04 yen JPY=D4 after Thursday’s 0.3 percent loss, heading for a 0.6 percent decline for the week.
At the new pace of the equity ETF purchase, 6 trillion yen per year, the exposure of the BoJ to equity market will quickly grow to such an extent that a severe negative shock could wipe out the banks’ capital by early 2018.
South Korean, Chinese, Taiwanese and Hong Kong markets are closed for holidays.
A report on inflation muddied the short-term fate for US interest rates ahead of separate meetings of the Federal Reserve and Bank of Japan.
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Over in oil, industry standard Brent crude reversed its upward course in Asian trading, losing 0.56%, to $46.33, while West Texas crude slid 0.59%, to $43.65.
