SINGAPORE, May 2 2018 : Asian equities held steady today, while the dollar traded near a four-month high as investors await the Federal Reserve’s upcoming policy statement for clues on the future pace of U.S. monetary tightening.
Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore, said that in addition to focusing on the Fed’s policy statement, equity investors may be turning cautious on the outlook for corporate profits, given potential cost pressures from recent rises in oil prices.
Market participants may be starting to wonder that “perhaps this is as good as it’s going to get,” Innes said, referring to corporate profits.
On Wall Street, the S&P 500 gained 0.25 percent yesterday on positive comments by U.S. Trade Representative Robert Lighthizer on China, and Mexico’s economy minister on the renegotiation of the North American Free Trade Agreement. Apple’s (AAPL.O) shares rose about 4 percent after the closing bell. The company beat revenue and profit expectations in its March quarter, with its shares ending the regular session up 2.3 percent.
The dollar’s index against a basket of six major currencies traded near a four-month high set yesterday, with the dollar having surged into positive territory for 2018 ahead of the U.S. Federal Reserve’s policy decision due today.
The Fed is seen set to hold interest rates steady this week but will likely encourage expectations that it will lift borrowing costs in June on the back of rising inflation and low unemployment.
The central bank is due to announce its decision at 2 p.m. EDT (1800 GMT) today. Fed Chairman Jerome Powell is not scheduled to hold a news conference.
The dollar held near a four-month high against a basket of major currencies, buoyed by the outlook for a strong U.S. economy and rising yields amid signs of slowdown elsewhere, especially in Europe.
The dollar index last traded at 92.437. Yesterday, it had risen to a high near 92.57, its highest level in nearly four months.
Against the yen, the dollar struck its highest level in nearly three months at 109.92 yen JPY= in early Asian trade and was last down 0.1 percent at 109.79 yen.
The euro held steady at $1.1997 EUR=, not far from yesterday’s low of $1.1981, the common currency’s weakest level since Jan. 11.
The benchmark U.S. 10-year Treasury yield eased about 1 basis point in early Asian trade to 2.970 percent.
That came after the U.S. 10-year Treasury yield rose 4 basis points yesterday, as bond prices came under pressure ahead of a quarterly refunding announcement.
The U.S. Treasury is scheduled to announce its findings from a refunding survey today, with analysts projecting an increase in auction sizes, or new issuance at different points on the yield curve.
Oil prices slid yesterday as the dollar remained near a four-month high, but worries that U.S. President Donald Trump will pull out of the Iran nuclear deal underpinned the market.
Spot gold last stood at $1,307.14. Yesterday gold had slid to a four-month low of $1,301.51 as the dollar strengthened. – Reuters