Hong Kong: The dollar slid on Tuesday, pushing gold prices to near record highs, while Asian stocks eased as investors awaited policy announcements from some key central banks this week for clues on the timing of eventual shifts in policy.
The Australian dollar slid on profit taking after the Reserve Bank of Australia -- which last month became the first G20 central bank to raise interest rates -- increased its key cash rate by another quarter point as expected.
European stock futures eased, while US equity futures were flat with markets awaiting a two-day US Federal Reserve meeting due to begin later in the day.
The dollar fell 0.2% against a basket of major currencies as the Fed is not expected to depart from a policy of maintaining low rates for an extended period of time although it could discuss how to prepare markets for an eventual policy shift.
The European Central Bank and the Bank of England are expected to keep rates unchanged when they announce policy statements on Thursday.
The Aussie, which traded as high as $0.9092, hit a low of $0.8990 after the RBA was careful not to fuel expectations of another hike in December.
Housing prices are on a tear in Australia, similar to other parts of Asia, keeping monetary authorities increasingly willing to take action to prevent bubbles, but Tuesday’s modest rate rise pointed to gradual not aggressive tightening.
“Clearly the Reserve Bank did not want to frighten the horses by lifting interest rates by half of one percent at this time,” said Craig James, chief equities economist at Comsec in Australia. “It is a gradual approach to lifting interest rates.”
Share prices in Australia dipped while the MSCI index of Asia Pacific stocks outside Japan was down 0.8%.
Evidence of a sustained recovery in world industrial activity may force policymakers to spell out the pace at which unusually abundant and cheap money will be withdrawn and Asian investors appear undecided about the corporate earnings outlook for this quarter, analysts said.
The Thomson Reuters index of regional stocks was up 0.4%.
Japan’s market was shut because of a public holiday.
In Manila, shares of Manila Electric Co (Meralco) rallied 13% in reaction to news that the son of a local mall tycoon had made a surprise offer to buy a stake in the firm.
In Hong Kong, shares of Swire Pacific jumped 3% by lunchtime after the conglomerate on Monday said it was considering spinning off its property unit.
Share markets in China outperformed the region with the Shanghai composite index up 1.2% as solid earnings and economic data this week continued to encourage investors.
US dollar weakness pushed the price of gold up to $1,063 an ounce, from $1,059 in late New York trade and within sight of a record high $1,070.40, struck on 14 October.
Gold is up around 20% this year, and will likely keep its record of not having a down year since 2000.
The International Monetary Fund said on Monday it sold 200 tonnes of gold to the Reserve Bank of India for $6.8 billion, quietly executing half of a long-planned bullion sale that had threatened to slow gold’s rally.
While the IMF’s plan to sell some of its gold holdings had been flagged for a year before it was formally approved in September, the speed of the deal and the buyer were a surprise for traders, who had expected China -- not India -- to be the leading contender as Beijing diversifies its vast reserves.
“The fact that they’ve sold the gold to India would suggest there’s going to be fewer official sales by the IMF on the market. So that might be a positive theme for the gold price,” said David Moore, commodities strategist at Commonwealth Bank of Australia.
This was the first time since 2000 that the IMF sold gold to a central bank.
US oil futures were essentially unchanged and remained above $78 a barrel. Crude’s break of $80 ran out of steam in October, though near-term direction is largely pinned on the US dollar.