Hong Kong: The dollar slid to a 15-year low against the yen and Asian stocks rose on Monday as US jobs data boosted the chances of easier US monetary policy and IMF and G-7 meetings produced little to ease global currency tensions.
Finance leaders meeting over the weekend in Washington produced no quick fix for global economic imbalances, suggesting the cheap money trade of selling dollars to buy emerging market assets and commodities looks set to continue for now.
That was further spurred by weaker-than-expected jobs data in the United States on Friday that raised the chances the Federal Reserve would inject fresh funds into the economy as soon as its 2 and 3 November meeting.
“We’ve had low interest rates in the most developed economies for some time and we have robust growth and the need to tighten policy elsewhere. That suggests the flows going into the emerging world are going to continue,” said Alan Ruskin, global head of FX Strategy at Deutsche Bank.
The dollar weakened broadly against a basket of currencies and against the yen fell as far as 81.37 yen, its lowest level in 15-year. It later recovered to 81.99.
Although Japan is closed for a national holiday on Monday, the dollar’s slide put markets on alert for potential intervention by the Bank of Japan, especially since the G-7 and the IMF didn’t produce any overt criticism of Tokyo’s yen selling.
The MSCI Asia ex-Japan stock index rose 0.7% on expectations that a flood of investment funds into emerging markets would continue.
Hong Kong shares hit a 2-year peak, breaking out of a trading range that has held since November 2009 and leading a broad rally in Asian markets.
“Investors almost seem to be welcoming weak US jobs data, taking it as a sign the US Fed will offer additional economic support measures,” said Kwak Joong-bo, a market analyst at Samsung Securities in Seoul.
CORN RISES MOST SINCE 1972
The Australian dollar looked set to test a 28-year high of $0.9918 against the US dollar, while shares rose to 5-month highs.
Australia is emerging as a clear winner in the investment shift to higher yields and commodities.
Shanghai zinc futures rallied almost 5% on Monday to their highest level since April, chasing gains in London, while copper rose to 6-month high.
Grain prices surged. Chicago corn jumped 8.5% for its biggest gain since 1972, boosted by a US government forecast that supplies in the world’s top exporter would shrink to their lowest in 14-year.
Precious metals extended their gains with spot silver hitting a 30-year high and gold rising 0.5% to edge back towards a record high reached on Thursday of $1,364.60 an ounce.
Emerging powers won a battle on Saturday for heightened IMF scrutiny of rich countries’ economic policies as world financial leaders sought to defuse mounting tensions over currencies.
Investors will get earnings reports this week from bellwether US corporations including Google, GE and JPMorgan Chase & Co, although the short-term direction of stocks is likely to be dominated by the possibility of more cheap money flowing in the from the Fed.