Dollar sank, euro added 0.2 percent and the Aussie extended gains; Early Forex review 

The dollar sank and Treasuries climbed after the Federal Reserve signaled that inflation remains persistently below its target even as the economy picks up steam. Asian stocks rose to the highest in almost a decade on optimism about corporate earnings.

The Bloomberg Dollar Spot Index traded at the lowest in more than a year, while the 10-year Treasury yield extended losses after the Fed held rates steady and indicated it would start unwinding its balance sheet “relatively soon.” The MSCI Asia Pacific Index reached the highest since December 2007 after earnings from Samsung Electronics Co. and Nintendo Co. beat analysts’ estimates, and the Dow Jones Industrial Average closed at a record high.

The Fed said inflation remains below the central bank’s 2 percent target even as near-term risks to the economic outlook appear balanced, signaling it intends to kick off the long-awaited reduction in its $4.5 trillion balance sheet in September and fueling speculation the central bank won’t rush to raise rates.

With the central bank’s announcement out of the way, investors can return to a corporate earnings season that’s seen more than 80 percent of S&P 500 companies deliver higher than-expected profit. In Asia, Samsung Electronics posted earnings that beat analysts’ estimates on the success of its new Galaxy S8 smartphones and surging prices of semiconductors, while Nintendo surprised investors with a big jump in quarterly profit . Thursday is shaping up as a busy day for Europe, with companies worth more than $3 trillion set to report their accounts.

Here are the main moves in markets:

Currencies

• The Bloomberg Dollar Spot Index fell 0.3 percent as of 12:59 p.m. in Tokyo after falling 0.6 percent on Wednesday. The yen traded at 110.90 per dollar, up 0.2 percent.
• The euro added 0.2 percent to $1.1756 after a 0.8 percent advance sent the currency to a 30-month high.
• The Aussie extended gains above 80 U.S. cents, rising 0.6 percent after jumping 0.9 percent Wednesday. It slid below 79 cents during local trading on Wednesday following weaker-than-expected Australian inflation data and a speech by the nation’s central bank governor.

Stocks

• Japan’s Topix index rose 0.4 percent, while Australia’s S&P/ASX 200 Index added 0.3 percent. South Korea’s Kospi index climbed 0.2 percent. In Hong Kong, the Hang Seng Index added 0.5 percent, while the Shanghai Composite Index dropped 0.3 percent.
• The Dow Jones Industrial Average rose above 21,700 for the first time on Wednesday.
• Futures on the Nasdaq 100 Index climbed 0.6 percent. Facebook Inc. rose 3.4 percent in after-hours U.S. trading after the company reported faster-than-expected sales growth.

Bonds

• The yield on 10-year Treasuries was at 2.28 percent, down one basis point after declining five basis points in the wake of the Fed statement from the previous session.
• Australian government notes with a similar maturity saw yields fall four basis points to 2.69 percent, erasing Thursday’s gain of four basis points.

Commodities

• Gold rose 0.3 percent to $1,263.73 an ounce after climbing 0.8 percent in the prior session.
• West Texas Intermediate crude slipped 0.1 percent to $48.68 a barrel after posting three days of gains.
• The Bloomberg Commodity Index advanced 0.3 percent, after climbing 0.7 percent on Wednesday.

Source: Bloomberg – Dollar Drops on Fed’s Inflation; Asia Stocks Rise: Markets Wrap

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