Dollar retreats as US Treasuries steady

Thursday 05.10 GMT

Overview

The dollar was on the back foot in afternoon Asia trading on Thursday as US Treasuries steadied and oil prices found their footing after dipping on news of growing US stockpiles.

Hot topic

The dollar index tracking the greenback against a basket of peers was off as much as 0.3 per cent, as a rally spurred by US Federal Reserve chair Janet Yellen’s comments at the start of the week lost steam.

A wide swath of currencies made minor gains on the dollar, with the yen rising 0.3 per cent, the renminbi, Swiss franc and Canadian dollar gaining 0.2 per cent and the euro up 0.1 per cent in the afternoon Asia session.

Equities

Tokyo’s Topix index was off 0.2 per cent, while the Nikkei 225 index dropped 0.4 per cent. Shares in Toshiba continued to fall in the wake of this week’s announcement of a $6.3bn writedown, with a 3.3 per cent drop bringing the stock down 18.9 per cent since Monday’s close.

Shares in Australian biotech company CSL were up 3 per cent as investors basked in the afterglow of Wednesday’s half-year results, which showed profits had risen 12 per cent against the same period the previous year. The S&P/ASX 200 index was up 0.1 per cent in Sydney.

Hong Kong-listed shares in Chinese tech company and WeChat owner Tencent were up 2.1 per cent, enjoying a second straight day of solid gains on news that its ubiquitous Chinese app ecosystem will introduce paid content. The benchmark Hang Seng index was up 0.4 per cent.

On Wednesday anticipation of deregulation under President Donald Trump that could include a repeal of Dodd-Frank legislation saw the banking sub-index of the FTSE All-World equity index rise 0.9 per cent. The global stock gauge reached a record intraday high of 293.73, surpassing the previous peak set in May 2015.

Fixed income

After five days of deterioration, 10-year US Treasuries were improving from their lowest level in more than two weeks. That followed a second round of comments from Ms Yellen made to the House Financial Services Committee on Wednesday and mounting speculation that the Fed could raise interest rates again in March.

Yield, which moves inversely to price, on the 10-year US notes was down 1 basis point after rising 13bp over the previous five days.

Moves in Asia-Pacific sovereign bonds were largely muted, although yield on the New Zealand 10-year note was up 5bp for the second day running after an ANZ consumer confidence index recorded a retreat in January from a 21-month high.

Commodities

Oil prices were steadying after dropping markedly on Wednesday in response to news that US oil stocks had climbed for a sixth straight week.

Brent crude, the international benchmark, was flat at $55.74 a barrel after dipping 0.4 per cent the previous day. West Texas Intermediate, the American marker, was down 0.1 per cent in Asia trading at $53.05 after dropping 0.2 per cent on Wednesday.

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