US Dollar rises; Asian stock drops due to Yellen comment
Quote:
Asian stocks slipped and the dollar advanced on Thursday after hawkish comments from Federal Reserve Chair Janet Yellen reinforced the case for an interest rate hike later this month.
Japan’s Nikkei lost 0.3 percent, moving in a tight range as a wait-and-see mood prevailed ahead of the European Central Bank’s policy decision later in the day.
China shares
Shanghai shares bucked the trend and were last up 0.1 per cent, brushing aside a Caixin/Markit Purchasing Managers’ Index showing growth in China’s services sector cooling in November.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.6 per cent taking a lead from Wall Street, which fell overnight on Yellen’s comments and falling crude prices that hit energy shares.
Yellen’s comments
Yellen had said on Wednesday she was “looking forward’’ to a US interest rate hike that will be seen as a testament to the economy’s recovery from recession.
Yellen’s comments come after expectations for a Fed rate hike at its December 15-16 policy meeting were slightly shaken on the back of poor manufacturing data released earlier in the week.
However, faith in the US economy was partially restored after Wednesday’s ADP data showed private employers added a larger-than-expected 217,000 jobs in November.
Dollar index
The dollar index advanced to a 12-1/2-year high of 100.51 following Yellen’s comments and the upbeat data. It last stood at 100.12.
The euro dipped 0.2 per cent to $1.0595. The markets were braced for the ECB potentially delivering long-expected monetary easing measures.
“There is great potential for euro volatility as the ECB announces its policy decision, followed by the press conference by President (Mario) Draghi starting 45 minutes later,’’ wrote Sean Callow, a senior strategist at Westpac.
“Draghi and selected colleagues have clearly signalled that there is sufficient risk of undershooting the ECB’s inflation target to warrant further loosening of monetary settings.’’
If she does it, it won't be a big bump, the markets will probably tank for a few days and rebound. There is no way they are going to aggressively start raising the rates while we clip along at ~2.0 GDP growth.
If she does it, it won't be a big bump, the markets will probably tank for a few days and rebound. There is no way they are going to aggressively start raising the rates while we clip along at ~2.0 GDP growth.
