Asian shares mixed, Nikkei up as Yellen remarks lift dollar

The main price driver in the Forex markets this week has been the strength of the U.S. Dollar. The Standard & Poor’s 500 index rose 10.18 points, or 0.5 percent, to 2,187.12.

The dollar has been gaining against all emerging market currencies since USA election results on November 9 on the hope that president-elect Donald Trump will come out with a growth-oriented policy, which will lead to higher interest rates.

The euro, which is vulnerable to a slew of political risks including an Italian constitutional referendum next month and French and German elections next year, hit an 11-month low of $1.0567.

US stocks had been on a tear since Donald Trump’s surprise victory in the USA presidential election last week as his proposals to increase infrastructure spending and reduce taxes are seen benefiting the economy.

Traders have raised bets on higher borrowing costs following President-elect Donald Trump’s pledge to boost spending and as U.S.

The S&P financial sector ended up 0.08 percent, and has risen 10.8 percent since the US election, boosted by prospect of higher interest rates and lighter regulation. What’s more interesting to markets is when the ensuing rate hike will be and it’s here that Trump’s victory could impact.

The dollar has been on a tear, along with a surge in U.S. Treasury yields, since Republican Donald Trump’s victory on November 8 over Democrat rival Hillary Clinton. They fell 8.5 tons to 1,940.6 tons as of Thursday, the lowest since July.

Sectors like consumer durables, FMCG and metals were dragging the market, while oil and gas, public sector banks and healthcare were providing some support to the market. As a result, the dollar has risen to near year-highs against the euro and six-month highs against the yen. In Europe, the pan-European Stoxx Europe 600 index reversed earlier losses to close 0.6 percent higher on Thursday, as United Kingdom retail sales data smashed forecasts and Yellen stressed that future rate hikes will likely be gradual.

“It is for this reason that we remain committed to preserving the very substantial degree of monetary accommodation, which is necessary to secure a sustained convergence of inflation towards level below, but close to, 2% over the medium-term”. Its stock gave up $4.93, or 16.1 percent, to $25.78.

The 10-year US Treasury yield rose to 2.355 per cent, its highest since December.

The Australian Dollar has continued tumbling against the US Dollar as the “Greenback” was strengthened by increasing market bets of a rise in interest rates in December, with investors now predicting the chances of the Fed hiking rates to be over 90%. It was up 2.2 per cent for the week. Japan’s benchmark Nikkei 225 index added 0.6 percent as the yen hit a six-month low, helping shares of the country’s big exporters.