Asian shares ease, dollar defensive as Fed stimulus cut looms

 

  Asian shares slipped on Friday and the dollar held to overnight losses against the yen as investors fretted not whether but by how much the US Federal Reserve will cut its monthly stimulus at next week's monetary meeting.

 

The Fed is expected to reduce its $85 billion a month bond-buying programme at its two-day policy meeting ending on Sept 18. But recent weaker-than-expected data, including jobs growth in August and consumer spending and durable goods orders in July, intensifies uncertainty about the extent of reduction.

 

Investors' unease deepened in overnight trading when they first favoured the US dollar after new US claims for state unemployment benefits slipped to the lowest level since 2006, but the dollar then went into reverse after the US Labor Department attributed much of the decline to computer problems in two states.

 

The dollar was steady at 99.67 yen after falling to a one-week low of 99.00 yen overnight. Against a basket of major currencies, the greenback also held steady, not far from a two-week trough touched on Thursday.

 

"While the dollar is exposed in the near term to better risk sentiment and a pause in the Treasury selloff, we generally do not like running short US dollar exposure," Societe Generale wrote in a note.

 

"The Fed is moving to exit, and Treasuries will stay bearish for longer, if not as aggressively, with higher yield set to support the dollar over the coming months."

 

MSCI's broadest index of Asia-Pacific shares outside Japan  dipped 0.2%, further pulling away from a three-month high and on track for a second day of loss after a 10-day winning streak - its longest such run in six years. The Asian gauge is still up 2.8% so far this week.

 

In Tokyo, the Nikkei share average added 0.2%.

 

A Reuters poll of economists on Monday found that most now see the Fed trimming its $85 billion monthly spending on bonds by about $10 billion, compared with estimates for a $15 billion reduction in a poll before the jobs report.

 

Gold gained 0.3% after sliding 3.4% on Thursday, its biggest one-day decline in more than two months, as a sudden price tumble in the futures market added to worries of falling prices as the Syrian chemical weapons crisis abates.

 

The US and Russia began talks on Thursday on Moscow's plan for Syria to surrender its chemical weapons as Damascus formally applied to join a global poison gas ban, but Secretary of State John Kerry held fast to the position that the US may still use military force if diplomacy fails.

 

Worries over a US military strike against Syria spooked risk markets two weeks ago, sending oil and gold prices higher and driving equities lower globally.

 

Brent crude added 0.2% to just below $113 a barrel on Friday.