Wednesday morning in Asia, the U.S. dollar strengthened against the currencies of Australia, New Zealand, U.K. and Europe as a slide in some Asian stocks on weaker commodity prices overnight boosted the safe-haven greenback.
The dollar also gained as traders await ADP employment report and the ISM non-manufacturing data later in the day.
Thus far in Asia, Japan’s Nikkei 225 index lost 0.12%, China’s Shangai Composite Index slipped 0.15%, South Korea’s Kospi fell 0.19% and Taiwan’s main index dropped 0.7%. Australia’s S&P 200 index and the All Ordinaries index declined 0.5% each.
But the New Zealand stocks rose today and the Hong Kong stocks are trading flat.
Crude oil prices tumbled by over 2% on Tuesday, due largely to profit taking after recent rally. A stronger dollar too contributed to the fall to an extent. Light, sweet crude for February delivery ended down US$2.17 or 2.4% at US$89.38 a barrel on the New York Mercantile Exchange.
Meanwhile, U.S. gold futures for February delivery settled down $44.1 an ounce at $1,378.80.
Minutes from the latest Federal Reserve meeting showed little willingness from officials to stray from stimulus to aid the fragile U.S. economic recovery.
The U.S. dollar rose to a 1-week high of 0.7631 against the New Zealand dollar in early Wednesday Asian deals at 8:50 pm ET. As of now, the kiwi-greenback pair is worth 0.7645, compared to yesterday’s close of 0.7668. On the upside, 0.745 is seen as the next target level for the U.S. dollar.
During early Wednesday Asian deals, the U.S. currency climbed to a 9-day high of 1.0020 against the Australian dollar at 8:45 pm ET. The aussie-greenback pair that closed yesterday’s trading at 1.0054 is currently worth 1.0030. If the greenback gains further, it may likely target the 0.985 level.
The Aussie fell as a report showed that the number of new homes sold in Australia decreased in November on the back of an interest rate hike from the Reserve Bank of Australia.
The Housing Industry Association-Jeld-Wen New Home Sales Report showed that the number of new homes sold eased by 0.2% month-on-month.
The U.S. dollar strengthened against the euro in early Asian session on Wednesday. At 8:45 pm ET, the dollar reached a 2-day high of 1.3265 against the euro, compared to 1.3309 hit late New York Tuesday. The next upside target level for the dollar is seen at 1.310.
In early Asian session on Wednesday, the dollar edged up against the pound. At present, the dollar is worth 1.5560 against the pound with 1.546 seen as the next upside target level. The pound-dollar pair closed yesterday’s trading at 1.5589.
But the U.S. is little changed against the currencies of Japan, Switzerland and Canada. Currently, the dollar is worth 82.13 against the yen, 0.9480 against the franc and 0.9996 against the loonie, compared to yesterday’s close of 82.08, 0.9489 and 0.9986, respectively.
The Bank of Japan said today that the monetary base in Japan was up 7.0 percent in December compared to the previous year, standing at 104.023 trillion yen. That follows a 7.6 percent annual increase in November.
Looking ahead, the revised services PMI reports from the major European economies for December, Eurozone PPI for November, industrial new orders for October, U.K. December construction PMI are expected to influence trading in the European session.
From the U.S., ADP National Employment report, which sheds light on non-farm private employment, is scheduled to be released at 8:15 am ET. The report is usually released two days prior to the Labor Department’s employment report.
The ISM is scheduled to release the results of its non-manufacturing survey at 10 am ET.