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Dollar Surge Weighs on Bonds, Emerging Markets While Topix Gains 

November 24, 2016

Emma O'Brien & En Han Choong, Bloomberg

The dollar extended gains at the highest in more than a decade as a stronger case for hiking U.S. interest rates weighed on bonds and gold. Japanese stocks climbed, while emerging-market assets dropped.

The greenback’s strength was felt across Asia, with India’s rupee touching a record low and the Philippine peso at the weakest in eight years. Japan’s Topix index climbed for a 10th straight session as investors returned from a holiday with the yen continuing to drop, while European equities rose. Gold traded near a nine-month low, and copper and zinc surged.

The selloff in bonds and emerging markets sparked by Donald Trump’s unexpected election as U.S. president resumed, after better-than-estimated data on durable goods orders and manufacturing helped keep bets on a Federal Reserve rate hike next month at 100 percent. Central bank officials saw a stronger case for policy tightening amid solidity in the labor market, with some saying a hike should take place in December, according to minutes of the November gathering. U.S. equity benchmarks extended records last session before the Thanksgiving holiday.

“The dollar has been really strong in anticipation of Yellen’s move next month and that strength in the U.S. dollar is ultimately going to mean that emerging market assets would be seen as disadvantaged,” Nicholas Teo, a strategist at KGI Fraser Securities in Singapore, said by phone. Read more

 
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