Trump's Dollar Comments Send Asia-Pacific Stocks Lower
April 12 2017 - 11:28PM
Dow Jones News
By Kenan Machado
President Donald Trump's comments on the U.S. dollar sent the
currency lower against its Asian counterparts, prompting a selloff
in key regional equity markets early Thursday.
Australia's S&P/ASX 200 was down 0.8% with index
heavyweights, some of which report in U.S. dollars, dragging the
benchmark lower.
Among mining exporters, Fortescue Metals slumped as much as
8.1%, while Rio Tinto lost 4.4%. BHP Billiton fell 4%. The
Australian dollar was last up 0.6% against its U.S.
counterpart.
In Japan, the Nikkei Stock Average was down 1.1% after earlier
reaching its lowest level since December, as the yen hit fresh
five-month highs against the U.S. dollar.
The WSJ Dollar Index, which measures the dollar against 16
currencies, fell 0.5% during U.S. trading and was off another 0.1%
in Asia.
The dollar began its slide overnight after Mr. Trump told The
Wall Street Journal that the currency "is getting too strong" and
he would prefer the Federal Reserve to keep interest rates low.
"It's very, very hard to compete when you have a strong dollar and
other countries are devaluing their currency," he said.
Mr. Trump also said he changed his mind on calling China a
currency manipulator because he doesn't want to jeopardize talks
with Beijing over confronting the North Korean threat.
"As soon as his comments hit the wires, including his comments
favoring a low-interest rate and that China is not a currency
manipulator, the U.S. dollar came under heavy pressure," said Greg
McKenna, chief market strategist at AxiTrader.
Early Thursday, China's central bank set the yuan 0.4% stronger
against the dollar, the biggest one-day increase since Jan. 18. The
dollar was last down 0.2% against the yuan in onshore trading.
But analysts say that the interest rate differential between the
U.S. and other countries could support the dollar. On Thursday,
central banks in South Korea and Singapore both kept policy
unchanged.
Meanwhile, overnight selling in U.S. banking shares extended
into Asia. Citigroup, J.P. Morgan Chase and Wells Fargo will report
first-quarter earnings Thursday. Australia's Macquarie Group fell
0.9% while Australia and New Zealand Banking Group lost 0.6%.
Japan's Shinsei Bank was off 1.6% and Mitsubishi UFJ Financial fell
1.4%.
The rising uncertainty pushed up demand for gold, with prices
hitting another five-month high Thursday. A weaker dollar makes
gold cheaper to buy.
Write to Kenan Machado at kenan.machado@wsj.com
(END) Dow Jones Newswires
April 12, 2017 23:13 ET (03:13 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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