Most Asia markets, dollar slip ahead of Yellen speech
HONG KONG, Aug 26 — Most Asian markets began the day on a negative note today while the dollar dipped as investors cautiously await a much-anticipated speech by Federal Reserve chief Janet Yellen.
With few catalysts to drive business this week, Yellen’s talk at the annual Jackson Hole symposium of global central bankers has hung over exchanges as traders hope for clues about the US economy and guidance on monetary policy.
Speculation has grown that the bank could lift interest rates as early as next month, although most experts say that is unlikely and that December or February would be safer bets.
“As is the case with most Fed speaking engagements, it will mainly involve deciphering verbal gymnastics while looking for a smoking gun,” Stephen Innes, senior trader at OANDA, said in a note.
“Traders will look for Dr Yellen’s views on shifting global and domestic economic landscapes as well as the all-important cost benefit of maintaining the status quo.”
With an interest rate hike unlikely in the immediate future, the dollar is struggling to gain traction. In early trade the greenback was at ¥100.46 compared with ¥100.55 in New York late yesterday, while the euro edged up to US$1.1290 from US$1.1281 (RM4.54 from RM4.53).
The dollar also fell against most other higher-yielding currencies such as the Australian dollar, South Korean won and Malaysian ringgit.
Equity traders were also on edge, with Japan’s Nikkei falling 0.7 per cent by the break, with another below-par inflation reading adding to pressure on authorities to act on the economy as years of stimulus fail to have any serious effect on growth.
Sydney and Seoul each lost 0.2 per cent. Singapore shed 0.1 per cent, Wellington 0.5 per cent and Manila 0.3 per cent.
However, Hong Kong added 0.7 per cent and Shanghai gained 0.2 per cent.
“You can’t take on risk ahead of important events,” like Yellen’s speech, Takashi Ito, a Tokyo-based equity strategist at Nomura Securities, told Bloomberg News.
“If (Yellen) does make more hawkish comments the market could be chaotic in the short term,” he added.
On crude markets both main contracts edged down slightly having enjoyed healthy gains yesterday after Iran’s oil minister said the country would attend a meeting of OPEC and Russian officials to discuss a global oversupply crisis.
The news came a day after Teheran poured water on reports it would go to the talks in Algeria, sending prices plunging. — AFP