Dollar jumps on yen, gives Japanese stocks a lift

By Reuters

Sep 08, 2014 09:02 PM EDT

The U.S. dollar was holding broad-based gains in Asia on Tuesday in a boon for shares of Japanese exporters but a burden for oil, gold and stocks in the energy majors.

As the dollar finally broke to a six-year peak on the yen and a one-year top on the euro, Brent oil sank to 16-month lows while gold carved out a three-month trough.

A falling yen tends to be viewed as positive for Japanese exporters and corporate profits, and helped lift the Topix .TOPX 0.5 percent to 1,305. That put the index within a whisker of this year's peak at 1,308.08 and a break there would put it on ground last trod in July 2008.

Markets elsewhere in the region were steady with MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS down a slight 0.1 percent.

Despite market concerns over China's economy, stocks there have been buoyed by talk of more stimulus and reform measures.

The CSI300 .CSI300 of the leading Shanghai and Shenzhen A-share listings put in its best performance in a year last week with gains of almost 5 percent.

On Wall Street, the Dow .DJI closed down 0.15 percent, while the S&P 500 .SPX fell 0.31 percent but the Nasdaq .IXIC eked out a 0.2 percent gain.

Energy led the decline, with the S&P energy index .SPNY off 1.6 percent and Exxon Mobil (XOM.N) down 1.5 percent.

Investors were now eagerly awaiting the launch of new products by Apple (AAPL.O) later on Tuesday in a much-hyped event at Cupertino, California.

Apple has fed high expectations, with promises by executives that the company's best product pipeline in 25 years is being readied inside its secretive facilities.

DOLLAR UP, POUND DOWN

In currencies, the dollar index .DXY climbed as far as 84.349, bringing into view the July 2013 peak of 84.753. A break there will take it to highs not seen since July 2010.

Giving bulls a boost, a research from the San Francisco Fed noted that investors are pricing in a lower trajectory for interest rates rises than members of the Fed itself are.

"The market's interpretation is that perhaps it had better re-price those expectations," said Emma Lawson, senior currency strategist at National Australia Bank.

The greenback raced to a high of 106.16 yen, while the euro slumped to a low of $1.2881. Investors were already giving the common currency a wide berth after the European Central Bank surprised on Thursday with a fresh round of stimulus.

Sterling was nailed to 10-month lows after a second opinion poll found a marked increase in support for Scottish independence just 10 days before the country votes on whether to break away from the United Kingdom.

The TNS poll found support for independence had risen six points to 38 percent, just a pip behind the 'No' camp at 39 percent. That follows a YouGov poll that showed approval of independence at 51 percent against the unity camp's 49 percent, the first to find a majority for a 'Yes' vote.

The YouGov poll caused tremors in financial markets on Monday, knocking the pound lower and hurting stocks of companies with a large Scottish presence. Sterling was at a fresh trough of $1.6092 early on Tuesday in Asia.

The gains for the dollar meant losses for commodities, with gold down at $1,255.70 an ounce after losing more than 1 percent on Monday.

Brent crude oil LCOc1 eased another cent to $100.19, after slumping as far as $99.36 overnight, the lowest since May 2013. U.S. crude CLc1 managed to bounce 30 cents to $92.96 a barrel.

© 2024 VCPOST, All rights reserved. Do not reproduce without permission.

Join the Conversation

Real Time Analytics