Hong Kong: The dollar recouped some of its overnight losses on Tuesday, while Asian shares slipped as investors shrugged off upbeat US home sale data and took light profits on recent rallies.
The US currency crawled up as investors in Asia grew more cautious ahead of a string of US economic data this week and the start of the Christmas shopping season on Friday after the Thanksgiving holiday in the US, which will be a key test of consumer confidence.
The dollar gained 0.2% against a basket of major currencies after falling in New York where the market took comments by a senior Federal Reserve official on Sunday as further evidence the central bank would maintain its very low interest rate policy for some time. Trading at 75.256, the dollar index was above a 15-month low at 74.679 reached last week.
Dealers in Tokyo said some investors were closing dollar short positions ahead of the Thanksgiving holiday.
Asian shares slid despite a solid performance on Wall Street after data showed existing home sales reached their highest level in two-and-a-half years, as profit-taking set in.
The Shanghai market was worst hit with the dollar-denominated B-share index plunging more than 7% as investors gave up on hopes for government measures to support the market.
Such speculation, including one that China might merge B shares with an international board being set up for foreign firms to list in Shanghai, had sparked a near-20% market rally earlier this month.
Hong Kong’s Hang Seng Index closed down 1.5% while Shanghai’s key index dropped 3.4%, its biggest daily decline in nearly three months.
The MSCI index of Asia-Pacific stocks traded outside Japan fell 1% but it has already rallied 66% this year, leading some investors to question whether data is strong enough to justify further gains at this stage.
“I think everyone has been waiting for a downturn for so long and it hasn’t come. There’s a bit of nervousness out there, you’ve got gold at record levels,” said Martin Angel, a dealer at Patersons Securities in Australia, where shares slid 0.7%.
Shares in Singapore, Sydney and Seoul ended down around 0.7%, while shares in Japan fell 1%.
As the dollar steadied, gold retreated to $1,167.90/8.90 an ounce as investors booked profits after the precious metal scaled a record high at $1,173.50 on Monday.
Victoria Thieberger in Melbourne and Jennifer Tan in Singapore contributed to this story.