The dollar took a breather, with the yen attempting a rebound, as traders looked ahead to this week’s US jobs report and other events that could disrupt the greenback’s surge. Asian index futures were mixed.
Both the yen and the euro climbed at least 0.1 per cent versus the dollar in early trade today, with Francois Fillon’s win in the French Republican Party primary — unexpected as recently as last week — potentially underpinning demand for haven currencies. Shares in New Zealand rose for a fourth day, with futures on stock gauges in South Korea and Hong Kong signalling gains, as those on Japan’s Nikkei 225 Stock Average retreated. Oil tumbled at the end of last week, while benchmark US equity indexes racked up fresh record highs.
Bets on the Federal Reserve pulling the trigger on their first interest-rate hike in a year hit 100 per cent last week, spurring the Bloomberg Dollar Spot Index to its highest level in at least a decade amid speculation President-elect Donald Trump will pursue reflationary policies. With updates on US gross domestic product and personal spending due before the much-watched payrolls data on Friday, financial markets may be shifting into wait-and-see mode. Italy’s constitutional referendum Dec. 4 could provide another flashpoint for investors concerned about the rising anti-establishment element globally, along with the Opec meeting on Wednesday, as producers struggle to agree on an output freeze.
Trump’s “policies and the market narrative for the next couple of months is more uplifting than it has been for many years,” Matthew Sherwood, head of investment strategy in Sydney at Perpetual Ltd, which manages about US$21 billion (RM93.3 billion), said in an e-mail to clients. “While Trump makes things more interesting, investors need to remain balanced between the short appeal of rising markets and the long-term limitation of secular stagnation.”
Thailand reports on trade today, and a gauge of manufacturing performance in the Southeast Asian nation is also due. Taiwan’s bounced-check ratio is scheduled as well.
The yen gained 0.3 per cent to 112.94 per dollar as of 7:16am Tokyo time (0616 in Malaysia), building on Friday’s 0.1 per cent climb, which saw it rally from an almost eight-month low. The euro added 0.2 per cent to US$1.0604 in a third day of gains. Fillon has won almost 70 per cent of the vote with about half the ballots counted, as voters opted for a candidate vowing to undertake tougher economic reforms as well as pursuing more traditional values. The 14-day RSI on Bloomberg’s dollar gauge rose to as high as 81 last week, its highest level since March 2015. Breaches of the 75 level tend to indicate an asset has been overbought.
New Zealand’s S&P/NZX 50 Index, the first major stock gauge to start trading each day, climbed 0.1 per cent. Futures on the Kospi index in Seoul rose at least 0.1 per cent with those on Hong Kong’s Hang Seng Index. FTSE China A50 Index futures lost 0.1 per cent Friday. Nikkei 225 futures fell 0.1 per cent in Osaka early Saturday, while yen-denominated contracts slipped 0.2 per cent to 18,385 at the end of last week. The S&P 500 Index climbed for a fourth day Friday, setting a new all-time high as traders returned from Thursday’s Thanksgiving holiday.