Markets were largely rangebound ahead of Friday's
much-anticipated U.S. core personal consumption expenditures (PCE) price index
data, the Federal Reserve's preferred measure of inflation. Few markets will be
open to assess and respond to the new data, however, given the long Easter
weekend in many countries.
Heightened focus was also on the yen, which was last little
changed at 151.35 per dollar, having slid to a 34-year low of 151.975 in the
previous session.
Japan's three main monetary authorities held an emergency
meeting on Wednesday to discuss the weak yen, and suggested they were ready to
intervene in the market to stop what they described as disorderly and
speculative moves in the currency.
That came after officials ramped up verbal warnings to stem
the yen's fall, with Finance Minister Shunichi Suzuki saying "decisive
steps" will be taken against excessive currency moves.
Japanese authorities last intervened to support the yen in
2022, when they also used phrases such as "deeply concerned" and
pledged to take "decisive steps" prior to intervention.
"Contrary to popular belief of 152 as the line in the
sand, I think it's more of the magnitude of the move that may matter,"
said Christopher Wong, a currency strategist at OCBC.
"There is also a limit to how far verbal intervention
can go. Nonetheless, the actual intervention risk is still high, if not
higher."
The sliding yen has been a boon for Japan's Nikkei, which is
up about 3% for the month thus far. It closed more than 1% lower.
In China, the yuan, which has similarly come under close
scrutiny as it continues to struggle on the weaker side of the key 7.2 per
level, steadied at 7.2268. It drew support from a strong fix by the People's
Bank of China on Thursday, as Beijing remains vigilant to any sharp sell-off in
the currency.
The central bank set the midpoint rate, around which the
yuan is allowed to trade in a 2% band, 1,311 pips stronger than a Reuters'
estimate, the widest gap since November 2023.
Chinese stocks also reversed losses from the previous day,
buoyed by a firmer yuan and expectations that Beijing will take more aggressive
measures to stimulate the economy.
The blue-chip CSI300 index and Shanghai Composite index each
rose roughly 0.9%, while Hong Kong's Hang Seng Index gained 1.45%.
All that lifted MSCI's broadest index of Asia-Pacific shares
outside Japan up 0.6%.
S&P 500 futures and Nasdaq futures were trading little
changed, while EUROSTOXX 50 futures added 0.32%. FTSE futures gained 0.46%.
DOLLAR POWER
In currencies, the dollar was on the front foot, helped in
part by comments from Fed Governor Christopher Waller, who said late on
Wednesday there is no rush to ease interest rates.
While a more than 50% chance of a first Fed cut in June
continues to be priced in, traders are placing greater bets for similar moves
by the European Central Bank and the Bank of England that same month.
Sweden's central bank on Wednesday signalled there was a
good chance of a series of rate cuts starting in May if inflation continued to
drop towards its 2% target.
Against the greenback, the euro fell 0.06% to $1.08215, and
sterling eased 0.08% to $1.26305.
The New Zealand dollar fell to its weakest level in more
than four months to $0.5981.
"(The dollar) is still being swayed by the relative
hawkishness of the Fed, taking all 19 policymakers together, and other central
banks, who have tilted even more toward dovish in their tone recently,"
said Thierry Wizman, global FX and rates strategist at Macquarie.
The renewed dollar strength halted a blistering rally in
gold that sent it to a record peak last week. The yellow metal last gained 0.1%
to $2,196.69 an ounce.
Oil prices edged up, with Brent gaining 39 cents to $86.48 a
barrel, while U.S. crude rose 50 cents to $81.85 per barrel.
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