GLOBAL MARKETS - Asian shares up ahead of Yellen testimony

Published Jul 11, 2017

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Tokyo - Asian shares and the dollar

cautiously edged higher on Tuesday, as investors awaited

testimony from Federal Reserve Chair Janet Yellen for clues on

when the central bank would tighten U.S. monetary policy.

MSCI's broadest index of Asia-Pacific shares outside Japan

edged a few points higher in early trading, with

sentiment underpinned by technology-led gains on Wall Street.

Japan's Nikkei stock index was up 0.1 percent, while

Australian shares slipped 0.2 percent.

The dollar index, which tracks the greenback against a

basket of six major rivals, added 0.1 percent to 96.094

ahead of Yellen's semi-annual monetary policy testimony before

Congress on Wednesday and Thursday.

"Normalisation of monetary policy in the coming months is

almost priced in, and the Fed will start shrinking its balance

sheet in September, and this does not necessarily mean a delay

of rate hikes," said Masafumi Yamamoto, chief forex strategist

at Mizuho Securities in Tokyo.

"This is supporting the dollar as a positive factor, and

limiting its downside at the moment," he said. "I think Yellen

will confirm that rate hikes are coming, and that balance sheet

shrinkage will come."

Against its Japanese counterpart, the dollar added 0.2

percent to 114.21, moving back toward a two-month high of

114.30 touched overnight, while the euro inched slightly lower

on the day to $1.1393.

The Canadian dollar was nearly flat against its U.S.

counterpart as investors awaited a Bank of Canada interest rate

decision on Wednesday.

Forecasters are divided on whether the central bank will

raise rates but data from the overnight index swaps market shows

that money markets are almost fully priced for an increase,

while an 80 percent chance of a second hike has been implied by

December.

Crude oil prices extended their overnight gains, even as

increased drilling activity in the United States and uncertainty

over Libyan and Nigerian production cuts clouded the future

supply outlook.

U.S. crude futures rose 0.4 percent to $44.56 a

barrel after adding 0.4 percent on Monday, while Brent crude

was 0.3 percent higher at $$47.04.

Reuters

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