Asian Shares Rally on Dovish Fed view

SINGAPORE — Asian stocks mostly rose on Monday, spurred by record high closes for the Dow and S&P 500 on bets that the Federal Reserve’s policy will remain accommodative following lackluster U.S. data, which sent the dollar reeling to a 10-month low.

Chinese stocks fell over 2 percent in early trade but recouped some of the losses after data showed the economy grew at a slightly faster than expected pace of 6.9 percent in the second quarter thanks to robust industrial output and retail sales.

The CSI 300 was 0.7 percent lower, and the Shanghai Composite was down 1.1 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.2 percent on Monday. Japanese markets were closed for a holiday.

Australian shares were 0.3 percent lower, while South Korea’s KOSPI jumped 0.3 percent.

The dollar index, which tracks the greenback against a basket of trade-weighted peers, hit a 10-month low early on Monday. It was trading flat at 95.156 after losing 0.6 percent on Friday.

“Friday’s U.S. data led to more  USD selling,” Stephen Innes, senior trader at OANDA, wrote in a note.

“With less than a 50 percent December rate hike probability priced in, and with no supportive Fed speak on the calendar before July 26th, the dollar could struggle.”

U.S. 10-year Treasury yields, however, which fell to as low as 2.279, recovered to end at 2.3319 percent on Friday.

New York Times via Reuters

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Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and 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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