Asian stocks lacked direction on Wednesday, while the dollar held firm despite falling U.S. Treasury yields, with markets weighing mixed signals from U.S. policymakers and economic data on the path of interest rates from the Federal Reserve .
The yen remained in decline despite the threat of intervention by the Japanese authorities to support it.
Crude oil remained near two-month lows amid signs of easing supply pressure and hopes of a ceasefire in the Middle East.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.19%, partly due to a decline in mainland China’s blue chip stocks. However, Hong Kong’s Hang Seng rose 0.52%.
Japan’s Nikkei fell around 1% as traders took profits after the previous session’s 1.6% rise. The tech-heavy index also succumbed to pressure from a selloff in U.S. chip stocks on Tuesday.
U.S. stock futures remained stable.
The yen slipped 0.16% to 154.94 per dollar, even as Japanese Finance Minister Shunichi Suzuki expressed deep concern about the negative impact of a weak currency and reiterated his commitment to respond to excessive volatility.
The U.S. dollar index – which measures the currency against the yen, euro, pound sterling and three other major currencies – rose 0.09% to 105.51, adding to the advance of 0 .3% on Tuesday.
The euro fell 0.12% to $1.07325 and the British pound lost 0.14% to $1.24915.
On Tuesday, Minneapolis Fed President Neel Kashkari suggested the U.S. central bank may have to forgo interest rate cuts this year due to persistent inflation.
Last week, Fed Chairman Jerome Powell said the wait to ease policy was taking longer than expected, but signaled his inclination was still to cut rates.
While prices remained stable, the labor market showed some signs of weakening in Friday’s monthly employment data. Consumer price data a week from now will be closely monitored.
“Debate continues within markets and among policymakers over the appropriate level of interest rates,” Kyle Rodda, senior financial markets analyst at Capital.com, wrote in a report.
“The absence of major US economic data in the coming days (means) there was little to position on or react to,” he added. “For now, markets see it as slightly more likely that there will be two cuts in the US this year, with the first planned for November.
Long-term U.S. Treasury yields stood at 4.4651% in Asian trading, after hitting a near one-month low of 4.42% on Tuesday.
Gold slipped 0.16% to around $2,310 an ounce.
Crude oil extended Tuesday’s declines after market sources said data expected later from the American Petroleum Institute will show an increase in U.S. crude and fuel inventories for last week, a sign of lower demand.
Furthermore, the United States believes that negotiations on a ceasefire in Gaza should help bridge the gap between Israel and Hamas, thus reducing the risks of supply disruption.
Brent crude oil futures fell 32 cents, or 0.38 percent, to $82.84 a barrel. U.S. West Texas Intermediate crude oil futures fell 28 cents, or 0.36 percent, to $78.10 a barrel.
