Asian equities rallied and the dollar faltered on Wednesday after Fed Chairman Jerome Powell’s less hawkish comments and hopes from traders and investors that the central bank could ease monetary policy soon.
Markets are now also looking forward to US President Joe Biden’s State of the Union address, in which he is likely to mention progress in the post-pandemic economy following the passage of sweeping infrastructure and inflation laws in 2022.
In a speech on Tuesday, the Fed’s Powell said disinflation had begun, but recalled that Friday’s jobs report showed the reasons for the long fight against inflation.
This employment data reported an increase of 517,000 new jobs in January, raising fears that the Fed could force further interest rate hikes.
Last week, the Fed raised interest rates by 25 basis points and said it had reached a key turning point in its fight against high inflation, but continued increases in borrowing costs are expected nonetheless.
The MSCI Asia Pacific Index outside Japan added 0.51%, while Japan’s Nikkei shed 0.69%. The Australian S&P/ASX 200 rose 0.31%.
Chinese stocks started trading up 0.1%, while Hong Kong’s Hang Seng rose 0.22%.
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Asian stocks rallied on the heels of Wall Street, which closed higher as traders digested Powell’s speech.
In Forex, the dollar fell a little. The dollar index was at 103.30, falling to 102.99 in the previous session.
The Japanese yen remained at 131.08 per dollar after gaining 1.2% in the previous session.
The New Zealand dollar rose 0.02% to $0.63265, while the Australian dollar added 0.11% to $0.69675.
Oil was up on Wednesday morning, with Brent crude futures adding 11 cents, or 0.1%, to $83.80 a barrel.
Futures for US West Texas Intermediate (WTI) crude rose 13 cents, or 0.2%, to $77.27 a barrel.
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