Dollar extends yen gains in Asia as Fed, BoJ diverge

AFP, HONG KONG: The dollar built on gains against the yen yesterday after the Federal Reserve unveiled plans to wind down its crisis-era stimulus and hinted at another interest rate hike before the end of the year.

Fed boss Janet Yellen said the world's biggest economy was "performing well" while it emerged after a closely watched meeting that most members of the policy board wanted to lift borrowing costs by December.

The central bank also announced it would next month begin cutting back on its holdings of bonds and other assets built up as part of a scheme to keep rates low and steer the economy through the global financial crisis a decade ago.

Yellen said policymakers would react accordingly to any negative impacts on the economy, adding that persistently low inflation would likely come to an end.

She also said if prices rose too quickly the bank would be able to lift rates quicker.

"It doesn't get any more brazenly hawkish from Dr Yellen, who along with the majority of her colleagues is clearly in the December rate hike camp and the markets are reacting to this news," said Stephen Innes, head of Asia-Pacific trading at OANDA.

The dollar surged in New York to 112.15 yen from 111.50 yen earlier in Asia. The US unit yesterday was given an extra lift after the Bank of Japan decided against altering its ultra-loose monetary policy, which analysts said could see it break above 113 yen soon.

The euro sank from around $1.20 to below $1.19 while the pound dropped below $1.35 in New York but the pair recovered some ground in Asia yesterday.

The greenback continued to advance against other higher-yielding currencies with the Australian and Canadian dollars, South Korean won and Indonesia's rupiah all well down.

The dollar's gains come after a run of losses in recent months as tepid inflation and a lack of movement on Donald Trump's economic agenda in Congress had seen investors bet on no more rate hikes this year.

The jump in the dollar against the yen boosted Japanese exporters, which helped the Nikkei index close 0.1 per cent higher.

Toshiba retreated as its US partner Western Digital vowed to block an $18-billion deal that will see the Japanese firm sell its key chip business to a consortium led by US investor Bain Capital and including Apple and Dell.

The deal, announced by Toshiba on Wednesday, is seen as crucial to the Japanese firm's survival.

But most other regional markets retreated. Hong Kong, where monetary policy is linked to that of the United States, eased 0.1 per cent while Sydney shed 0.9 per cent on falling iron ore prices.

Shanghai was off 0.2 per cent, Singapore eased 0.1 per cent and Seoul retreated 0.2 per cent. Wellington slipped 0.3 per cent but Taipei was up 0.6 per cent and Manila put on 1.1 per cent.

In early European trade, London was barely changed, while Paris rose 0.4 per cent and Frankfurt put on 0.3 per cent.

On oil markets, both main contracts dipped following an almost two per cent rally Wednesday on data showing US gasoline stockpiles had fallen to a 22-month low, while speculation circulates that Nigeria and Libya will join the OPEC-Russia production cuts.

Dollar extends yen gains in Asia as Fed, BoJ diverge

AFP, HONG KONG: The dollar built on gains against the yen yesterday after the Federal Reserve unveiled plans to wind down its crisis-era stimulus and hinted at another interest rate hike before the end of the year. Fed boss Janet Yellen said the worlds biggest economy was performing well while it emerged after a closely watched meeting that most members of the policy board wanted to lift borrowing costs by December. The central bank also announced it would next month begin cutting back on its holdings of bonds and other assets built up as part of a scheme to keep rates low and steer the economy through the global financial crisis a decade ago. Yellen said policymakers would react accordingly to any negative impacts on the economy, adding that persistently low inflation would likely come to an end. She also said if prices rose too quickly the bank would be able to lift rates quicker. It doesnt get any more brazenly hawkish from Dr Yellen, who along with the majority of her colleagues is clearly in the December rate hike camp and the markets are reacting to this news, said Stephen Innes, head of Asia-Pacific trading at OANDA. The dollar surged in New York to 112.15 yen from 111.50 yen earlier in Asia. The US unit yesterday was given an extra lift after the Bank of Japan decided against altering its ultra-loose monetary policy, which analysts said could see it break above 113 yen soon. The euro sank from around $1.20 to below $1.19 while the pound dropped below $1.35 in New York but the pair recovered some ground in Asia yesterday. The greenback continued to advance against other higher-yielding currencies with the Australian and Canadian dollars, South Korean won and Indonesias rupiah all well down. The dollars gains come after a run of losses in recent months as tepid inflation and a lack of movement on Donald Trumps economic agenda in Congress had seen investors bet on no more rate hikes this year. The jump in the dollar against the yen boosted Japanese exporters, which helped the Nikkei index close 0.1 per cent higher. Toshiba retreated as its US partner Western Digital vowed to block an $18-billion deal that will see the Japanese firm sell its key chip business to a consortium led by US investor Bain Capital and including Apple and Dell. The deal, announced by Toshiba on Wednesday, is seen as crucial to the Japanese firms survival. But most other regional markets retreated. Hong Kong, where monetary policy is linked to that of the United States, eased 0.1 per cent while Sydney shed 0.9 per cent on falling iron ore prices. Shanghai was off 0.2 per cent, Singapore eased 0.1 per cent and Seoul retreated 0.2 per cent. Wellington slipped 0.3 per cent but Taipei was up 0.6 per cent and Manila put on 1.1 per cent. In early European trade, London was barely changed, while Paris rose 0.4 per cent and Frankfurt put on 0.3 per cent. On oil markets, both main contracts dipped following an almost two per cent rally Wednesday on data showing US gasoline stockpiles had fallen to a 22-month low, while speculation circulates that Nigeria and Libya will join the OPEC-Russia production cuts.