The US dollar struggles post Fed minutes

Tokyo stocks opened flat on Thursday as investors focused on prospects for US interest rates after a widely expected June hike.

US central bankers say it will “soon” be time to raise the key lending rate again, according to minutes from the most recent Federal Reserve meeting released Wednesday.

Monetary policymakers say they may wait, however, to see if weak growth recorded earlier this year was only temporary, seeming to open the possibility that the next rate increase could be delayed until after June.

The minutes “did not contain anything that prompted concerns” among market participants, Okasan Online Securities said in a commentary.

“Japanese stock markets would be directionless, as support from rallies in US shares would be offset by the cap on the dollar-yen rate,” it added.

The benchmark Nikkei 225 slipped a marginal 0.03 percent, or 5.52 points, to 19,737.46 in the first few minutes of trading, while the Topix index of all first-section issues was also down 0.03 percent, or 0.48 points at 1,574.63.

The dollar fetched 111.56 yen in early Asian trading Thursday, almost unchanged from 111.52 yen in New York late Wednesday and down from 111.92 yen the previous day in Asia.

The Fed minutes offered “few hawkish surprises” so resulted in a sell-off in the dollar, Stephen Innes, senior trader at foreign exchange firm Oanda, wrote in a commentary.”

Toyota fell 0.45 percent to 5,974 yen and Sony was down 0.22 percent at 3,989 yen.

But Toshiba rose 1.47 percent to 255.2 yen, after a Nikkei business daily report that it agreed with joint venture partner Western Digital to negotiate the sale of a chip plant in Japan to the US company.

AFP

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Stephen Innes

Stephen Innes

Senior Currency Trader and Analyst at OANDA
Stephen has over 25 years of experience in the financial markets and specializes in Asian currencies at OANDA. After having started his trading career with NatWest Bank, he is currently based in Singapore as a Senior Currency Trader and Analyst with OANDA, focusing on the movement of the Aussie Dollar and ASEAN Currencies. Stephen has an extensive trading experience in Interest Rate Futures, Money Markets and Precious Metals. Prior to joining OANDA, he worked with organizations like Cambridge Mercantile, Nat West, Garvin Guy Butler, Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

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