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Dollar near seven-month high as euro slides, Asia slips on weaker oil

by October 21, 2016 General

By Shinichi Saoshiro | TOKYO

TOKYO Asian stocks slipped on Friday with a fall in crude oil prices dampening investor risk sentiment, while the dollar hovered near a seven-month high against an index of peers.

The dollar was boosted by a fall in the euro after the European Central Bank shot down talk it was contemplating tapering its monetary easing – sending the euro lower.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.2 percent.South Korea’s Kospi .KS11 lost 0.4 percent and Australian stocks shed 0.3 percent.

Japan’s Nikkei bucked the trend and rose 0.2 percent .N225, brushing a six-month high, as the yen weakened against the dollar.

U.S. stocks ended a choppy session on Thursday slightly lower as investors digested the latest round of earnings, with a sharp drop in telecoms offset by gains in healthcare. [.N]

The ECB left its ultra-loose monetary policy unchanged on Thursday but kept the door open to more stimulus in December, with ECB President Mario Draghi dousing recent market speculation that the central bank may begin tapering its 1.7 trillion euro asset-buying programme.

“The European Central Bank removed a source of immediate risk for traders by revealing that it did not discuss tapering its QE program at this month’s meeting,” wrote Ric Spooner, chief market analyst at CMC Markets.

“Decisions are being deferred until December pending the outcome of research – meaning that meeting will be a key focus for markets.”

The dollar index .DXY was steady at 98.318, not far from 98.404, its highest since March scaled overnight.

The euro was little changed at $1.0926 EUR=, within reach of a four-month trough of $1.0916 struck on Thursday on ECB President Draghi’s dovish comments.

The dollar was up 0.1 percent at 104.085 yen JPY= adding to overnight gains of 0.5 percent.

Sterling was flat at $1.2251 GBP=D4, taking in stride comments by European Council President Donald Tusk that British Prime Minister Theresa May had confirmed that Brexit talks would be triggered by end-March 2017.

U.S. crude futures CLc1 were down 0.1 percent at $50.58 a barrel. The contract lost more than 2 percent on Thursday as the dollar’s surge prompted profit-taking on a rally that sent U.S. crude to 15-month highs midweek. [O/R]

(Reporting by Shinichi Saoshiro; Editing by Eric Meijer)

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