Finance

Dollar faces fresh pressure while most Asia markets turn down

The dollar suffered fresh losses on Monday, while most Asian markets turned negative as investors await a Federal Reserve policy meeting and the release of big-name earnings results.

The euro extended last week's gains against the dollar in Asian trade and analysts say it could could continue to strengthen
The euro extended last week's gains against the dollar in Asian trade and analysts say it could could continue to strengthen (AFP)

The dollar suffered fresh losses on Monday, while most Asian markets turned negative as investors await a Federal Reserve policy meeting and the release of big-name earnings results.

Uncertainty surrounding Donald Trump's presidency continues to drag on sentiment with Wall Street's three main indexes ending last week on a negative note.

The single currency extended last week's rally against the greenback after European Central Bank boss Mario Draghi said policy makers would address its vast stimulus programme by the autumn, fuelling speculation they would start winding it in.

In early trade Monday the euro bought $1.1670, around two-year highs, with analysts predicting it could break above the $1.1714 mark set in mid-2015.

The dollar was also well down against the yen and pound. The unit has struggled as Trump's travails -- from a probe into his election campaign's links to Russia and failure to push through crucial health care reforms -- dampen expectations he will be able to pass his much-vaunted economic agenda.

"Factoring in the expanding US political sinkhole, which is weighing on broader (dollar) sentiment, it's unlikely the market has run out of steam," Stephen Innes, head of Asia-Pacific trading at OANDA, said in a note.

Traders will be keeping an eye on the Fed's latest policy meeting, which ends on Wednesday, hoping for some guidance on its plans for raising interest rates. Expectations for further hikes have been tempered in recent weeks as inflation remains tepid and Trump's woes build up.

On equities markets, Tokyo's Nikkei index ended the morning down 0.9 percent as exporters were hit by the strong yen, while Sydney shed one percent and Seoul was 0.2 percent off.

Singapore gave up 0.4 percent and Taipei and Wellington were each 0.1 percent lower.

There were also losses in Manila and Jakarta but Hong Kong was up 0.5 percent -- having risen for nine of the previous ten trading days. Shanghai gained 0.2 percent

Michael McCarthy, chief market strategist at CMC Markets, said: "Japan and the US releases could dominate market thinking.

"These releases will occur alongside the busiest week of the US corporate reporting season so far and an interest rate decision from the US Federal Reserve.

"This snapshot of two major economies leads into (factory activity) data from China the following week. The outlook for markets may change considerably, especially if recent US economic weakness persists."

Key figures around 0230 GMT

Tokyo - Nikkei 225: DOWN 0.9 percent at 19,927.29 (break)

Hong Kong - Hang Seng: UP 0.5 percent at 26,850.70

Shanghai - Composite: UP 0.2 percent at 3,245.53

Euro/dollar: UP at $1.1670 from $1.1666 at 2030 GMT Friday

Pound/dollar: UP at $1.3004 from $1.2994

Dollar/yen: DOWN at 110.88 yen from 111.13 yen

Oil - West Texas Intermediate: DOWN eight cents at $45.69 per barrel

Oil - Brent North Sea: DOWN eight cents at $47.98

New York - DOW: DOWN 0.3 percent at 21,580.07 (close)

London - FTSE 100: DOWN 0.5 percent at 7,452.91 (close)