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Friday, May 24, 2024

Asia Stocks Remain Level, Dollar Solid as Fed Rate Path is Pondered

On Wednesday, Asian stocks showed indecision, with the dollar holding strong despite lower U.S. Treasury yields. Investors were parsing through mixed signals from U.S. policymakers and economic data to gauge the Federal Reserve’s stance on interest rates.

Despite the Japanese authorities’ threat of currency intervention to bolster the yen, the currency remained weak.

Crude oil prices stayed near two-month lows due to indications of easing supply pressures and ongoing optimism about a potential ceasefire in the Middle East.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), slid 0.19%, weighed down partly by declines from mainland Chinese blue chips (.CSI300),. However, Hong Kong’s Hang Seng (.HSI), rose 0.52%.

Japan’s Nikkei (.N225), slumped about 1% as traders took profits following the previous session’s 1.6% surge. The tech-heavy index also succumbed to pressure from a sell-off in U.S. chip stocks on Tuesday (.SOX),.

U.S. stock futures were flat.

The yen slipped 0.16% to 154.94 per dollar , even as Japan’s Finance Minister Shunichi Suzuki expressed deep concern over the negative impact of a weak currency and reiterated a readiness to respond to excessive volatility.

The U.S. dollar index – which measures the currency against the yen, euro, sterling and three other major peers – rose 0.09% to 105.51, adding to Tuesday’s 0.3% advance.

The euro edged down 0.12% to $1.07325 and sterling lost 0.14% to $1.24915.

On Tuesday, Minneapolis Fed President Neel Kashkari suggested the U.S. central bank may need to forgo interest rate cuts this year due to stubborn inflation.

Last week, Fed Chair Jerome Powell said the wait to loosen policy is taking longer than anticipated, but signalled his inclination is still to cut.

And while prices have been sticky, the labour market showed some signs of weakening in the monthly payrolls data from Friday. Consumer price data in a week from now will be closely watched.

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