BCN-01 Dollar suffers further losses as Fed fails to inspire

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BCN-01

ASIA-MARKETS

Dollar suffers further losses as Fed fails to inspire

HONG KONG, Dec 14, 2017 (BSS/AFP) – The dollar suffered fresh losses on
Thursday as Asian investors followed their New York counterparts in shifting
out of the unit, unmoved by another interest rate hike and an upbeat
assessment of the world’s top economy.

The greenback sank after the much-anticipated central bank meeting, which
provided little to excite buyers, despite tentative hopes US lawmakers are on
course to push through market-friendly tax cuts.

The Fed lifted borrowing costs as expected and said economic growth would
be stronger than initially forecast, while inflation would also improve. It
also said its projections for three more rate rises next year were on course.

However, Marvin Loh, senior global market strategist at Bank of New York
Mellon, told Bloomberg News: “Markets are generally interpreting the meeting
as a dovish hike.

“The improved view in 2018 may be driven by tax reform, which will not
have a long-lasting impact.”

A below-par reading on inflation added to selling in the dollar, which
retreated against most other currencies in New York. It fell through the 113
yen mark, while the pound was above $1.34 and the euro broke $1.18.

And in Asia it continued to struggle, while the Australian dollar surged
1.5 percent against the greenback, supported by a better-than-expected jobs
reading from Canberra. There were also healthy gains for the South Korean
won, South African rand and Mexican peso.

Greg McKenna, chief market strategist at AxiTrader, said the weakness in
the dollar “suggests (investors) don’t believe the Fed’s outlook nor its rate
projections”.

– Tax cut hopes –

Adding to nervousness among traders was the Republicans’ shock loss in the
Alabama senate election, which narrowed their majority to just two —
fuelling concern that Donald Trump will struggle to push through many of his
promised reforms.

However, there is hope his much-vaunted tax cuts will pass through before
the Democrats’ newest senator takes his seat.

MORE/HR/0940

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ASIA-MARKETS 2 LAST HONG KONG

Reports said Wednesday that Republicans in both chambers of Congress had
reached an agreement in principal on the massive tax bill, setting the stage
for its final passage next week.

Equity markets were mixed in Asia, brushing off another record for the
Dow in New York.

Tokyo ended the morning 0.1 percent lower as exporters were weighed by a
stronger yen, while Shanghai dipped 0.2 percent and Singapore shed 0.6
percent.

However, Hong Kong was up 0.1 percent and Sydney gained 0.2 percent, while
Seoul put on 0.7 percent.

Taipei, Manila and Wellington were all in positive territory.

Oil prices edged up but only made a small dent in Wednesday’s losses,
which came despite another report showing US inventories had fallen.

“That suggests a lot of, perhaps all, the current news about tightness in
the oil market is already priced,” said McKenna.

There are also worries that an output cap agreed by major producers in
OPEC and Russia could be lifted next year.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 0.1 percent at 22,726.76 (break)

Hong Kong – Hang Seng: UP 0.1 percent at 29,259.07

Shanghai – Composite: DOWN 0.2 percent at 3,298.40

Euro/dollar: UP at $1.1842 from $1.1828 at 2200 GMT

Pound/dollar: UP at $1.3422 from $1.3415

Dollar/yen: UP at 112.67 yen from 112.56 yen

Oil – West Texas Intermediate: UP 22 cents at $56.82 per barrel

Oil – Brent North Sea: UP 40 cents at $62.84 per barrel

New York – DOW: UP 0.3 percent at 24,585.43 (close)

London – FTSE 100: DOWN 0.1 percent at 7,496.51 (close)

BSS/AFP/HR/0945