Asian stocks were firm on Thursday while the dollar remained on the back foot amid lower US Treasury yields after benign consumer inflation data overnight reinforced bets for the Federal Reserve to start cutting interest rates next month.
Regional equities took their lead from gains on Wall Street, with Japan’s Nikkei rising 0.5 per cent and Australia’s stock benchmark up 0.1 per cent.
Mainland Chinese blue chips added 0.4 per cent, although Hong Kong’s Hang Seng slipped 0.3 per cent.
US S&P 500 futures pointed 0.1 per cent higher after the cash index advanced 0.4 per cent on Wednesday, buoyed by the slowest rise in the consumer price index in more than three years.
The dollar remained weak after slumping overnight to its lowest level to the euro since the end of last year. The single currency traded flat at $US1.1009 ($A1.6681) after reaching $US1.1047 ($A1.6739)5 in the previous session.
The 10-year Treasury yield ticked up slightly to 3.84 per cent in Asian hours, after dipping to as low as 3.811 per cent on Wednesday.
Traders remain convinced that the Fed will reduce rates on Sept. 18 for the first time in four-and-a-half years, but are split on whether policy makers will opt for a super-sized 50 basis-point reduction. While inflation is slowing, signs it may remain sticky spurred a reduction of bets on a larger cut to 37.5 per cent from about 50 per cent a day earlier.
A major macroeconomic test looms later on Thursday with the release of US retail sales figures.
“If we were to see a negative retail control sales number, it would likely set alarm bells ringing, given the market’s recent concerns about a recession in the US,” said Tony Sycamore, a market analyst at IG.
The dollar was stable at 147.35 yen as the pair continued its week-long consolidation around the 147 mark.
Sterling remained depressed after soft UK inflation figures hinted at faster, deeper Bank of England rate cuts. The currency was flat at $US1.2824 ($A1.9431) after sagging 0.3 per cent on Wednesday.
The Australian dollar was at $US0.6600 ($A1.0000), erasing early losses to be slightly higher following a choppy reaction to an increase in employment.
Gold edged up 0.1 per cent to $US2,449.60 ($A3,711.68) per ounce after Wednesday’s 0.7 per cent dive.
Oil prices rose on Thursday, recovering some of the previous day’s loss, on hopes that potential Fed rate cuts would boost demand.
Brent crude futures added 0.2 per cent to $US79.93 ($A121.11) a barrel, and US West Texas Intermediate crude increased 0.3 per cent to $US77.21 ($A116.99). Both benchmarks fell more than 1.0 per cent on Wednesday after an unexpected rise in US crude inventories.
This post was originally published on Michael West.