The yen declined as the dollar extended gains against major peers after the U.S. Federal Reserve paved the way for another interest-rate increase this year. Stocks in Asia opened mixed.
The Japanese currency fell for a fifth day and Bloomberg’s dollar index rose as the U.S. central bank set an October start for shrinking its balance sheet and maintained a forecast for another rate increase this year. Stocks climbed in Japan as the yen weakness boosted exporters, while equities fluctuated in Sydney and Seoul. The 10-year Treasury yield approached 2.30 percent. Oil held above $50 a barrel and gold retreated.
While policy makers left the benchmark interest rate unchanged, markets reacted to officials’ hawkish forecast for where rates will be at the end of the year. U.S. central bankers are counting on steady growth and low unemployment to raise inflation closer to their goal, which would support their policy of gradual tightening through interest-rate increases and a reversal of quantitative easing.
Attention now turns to the Bank of Japan, which ends a two-day policy meeting on Thursday. All 45 economists surveyed by Bloomberg this month said they expect the BOJ to leave policy unchanged, and nearly all of them said they don’t see any change before Governor Haruhiko Kuroda’s current term expires in April. Read a decision-day guide on the BOJ here.
Terminal subscribers can read more in our Markets Live blog.
What to watch out for the rest of this week:
- New Zealand’s economy expanded at a faster pace in the second quarter, with GDP rising 0.8 percent, matching economists’ median forecast. It’s the last major economic release before the Sept. 23 election.
- In Australia, Reserve Bank of Australia Governor Philip Lowe speaks in Perth on “The Next Chapter.”
- Philippine and Taiwan rate decisions are due Thursday.
- Brexit strategy is in focus as Theresa May prepares to outline her revised approach on Friday.
- Campaigning continues in Germany, days before the Sept. 24 election.
- The OECD publishes the Interim Economic Outlook in Paris.
Here are the main moves in markets:
- Japan’s Topix index climbed 0.6 percent as of 9:15 a.m. Tokyo time. The Kospi index and Australia’s main benchmark were little changed.
- Futures contracts on Hong Kong’s Hang Seng Index fell.
- Futures on the S&P 500 Index were flat. The main gauge rose 0.1 percent. The index closed at an all-time high, but hasn’t moved more than 0.3 percent for five sessions.
- The MSCI All-Country World Index added 0.1 percent to set a fresh record high.
- The Bloomberg Dollar Spot Index rose 0.1 percent, adding a 0.5 percent surge on Wednesday.
- The yen slid 0.3 percent to 112.56 per dollar. It dropped 0.6 percent on Wednesday.
- The Australian dollar fell 0.2 percent to 80.17 U.S. cents.
- The New Zealand dollar lost 0.3 percent to 73.37 U.S. cents. The kiwi has been sensitive to opinion polls ahead of an election this weekend, jumping on Wednesday when the latest survey showed the ruling National Party surging back into the lead over the main opposition Labour Party.
- The euro declined 0.2 percent to $1.1872. It declined 0.9 percent in the previous session.
- The yield on 10-year Treasuries was steady at 2.27 percent, the highest since July.
- Australian 10-year bond yields climbed about four basis points to 2.87 percent.
- Gold lost 0.2 percent to $1,298.04 an ounce.
- West Texas Intermediate crude climbed 0.6 percent to $50.70 a barrel following a 1.9 percent advance. A drop in U.S. fuel supplies boosted the outlook for crude demand.
— With assistance by Jeremy Herron, and Lu Wang