Asia shares tick up, dollar defensive ahead of Bernanke testimony

 

Asian shares inched higher on Wednesday, while the dollar held a three-week low on expectations Federal Reserve Chairman Ben Bernanke will reiterate later in the day that US monetary policy is to stay accommodative.

 

Bernanke is set to testify to Congress on Wednesday and Thursday, which could provide further clarity on when the US central bank will roll back its $85 billion a month bond-buying programme.

 

His comments last week that highly accommodative monetary policy would be needed for the foreseeable future wrongfooted investors, who had bet on the Fed to scale back stimulus as soon as September, sending the dollar sharply lower and equities higher.

 

The dollar held near a three-week low against a basket of major currencies after losing around 0.7% overnight.

 

Traders said preemptive moves to cut long dollar positions allowed for a bounce if Bernanke did not appear to be extremely dovish. Bernanke's prepared remarks for his congressional appearance will be released at 1230 GMT.

 

"We continue to favour running long dollar positions versus G10 currencies, whose central banks are in easing mode, particularly sterling right now," analysts at BNP Paribas wrote in a note.

 

Asian shares, as measured by MSCI Asia-Pacific ex-Japan index, added 0.2%.

 

Tokyo's Nikkei share average dropped 0.7%, while Australian shares put on 0.2%.

 

US stocks eased overnight, with the S&P 500 snapping an eight-day winning streak after disappointing sales from Coca-Cola . 

 

US consumer prices accelerated in June but underlying inflation pressure showed signs of stabilising, keeping on course expectations that the Fed will start reducing its bond purchases later this year.

 

Other data on Tuesday showed US industrial production pushed higher last month, raising hopes that a recent slowdown in factory activity was either over or close to running its course.

 

In the commodity markets, gold dipped 0.1% after gaining 0.8% on Tuesday, while copper prices eased 0.1 to below $7,000 a tonne after a 1.2% rise in the previous session.

 

Brent crude prices fell 0.2% to below $108 a barrel, though not too far from a 3-1/2 month high touched on Tuesday.