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Asian markets dip, dollar buoyant as US Fed meet comes into view

Japan's Nikkei was down 0.5 per cent and South Korea's KOSPI slid 0.5 per cent

Reuters  |  Tokyo 

Asia stocks, asian stock, nikkei, australian stocks

Asian stocks edged lower early on Monday following a slide by US technology shares and the dollar rose ahead of this week's policy meeting, with hoping for more guidance on the central bank's interest rate path.

The Fed holds a two-day meeting ending on Wednesday at which it is widely expected to hike interest rates. The focus is on whether the Fed thinks the US economy is robust enough to withstand further rate increases through 2017.

A rate hike accompanied by a message suggesting that the Fed may raise rates more than expected in 2017 would support the dollar but be negative for equity

"Political events like the and Comey's testimony are over and the focus this weeks shifts to monetary policy," said Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo.

"The equity and the dollar have mostly priced in the Fed signalling three rate hikes in 2017. That explains why US equities have held up. But if the Fed hints at more than three hikes, that could trigger a sell-off in equities that many are bracing for."

MSCI's broadest index of Asia-Pacific shares outside was down 0.1 per cent following a mixed day Friday on Wall Street where the Nasdaq slid 1.8 per cent on tumbling technology shares but the Dow closed at yet another record high.

MSCI's Asia-Pacific index was still in reach of a two-year high scaled late last week.

Japan's was down 0.5 per cent and South Korea's KOSPI slid 0.5 per cent. Australian were closed for a public holiday.

Equities navigated through last week's potential landmines events relatively unscathed.

Congressional testimony by former FBI Director caused few ructions, and the fallout of Britain's surprise parliamentary election result, at which the ruling party lost the majority, was mostly contained to the pound.

Sterling was down 0.05 per cent at $1.2734 after sliding 1.7 per cent on Friday, when it plumbed a near two-month low of $1.2636.

The dollar was steady at 110.320 yen. The euro was a shade higher at $1.1205 following three straight days of losses against the greenback.

The dollar index against a basket of currencies was little changed at 97.255 following its rise on Friday to a 9-day high of 97.500.

The US currency received support as Treasury yields, which marked seven-month lows early last week at the height of investor jitters towards the UK elections and Comey's testimony, continued their bounce ahead of the Fed's anticipated rate hike.

In commodities, crude oil prices extended gains after rising on Friday when a pipeline leak in major producer Nigeria overshadowed supply worries that have been weighing on the market.

US crude and Brent were both 0.35 per cent higher at $45.99 and $48.32 a barrel, respectively.

First Published: Mon, June 12 2017. 08:16 IST