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Asian Stocks Hold Up, US Dollar Back in Demand

Asian Stocks Hold Up, US Dollar Back in Demand

David Cottle, Analyst

Talking Points:

  • Asian shares held up in a session thinned by the Chinese New Year break
  • The US Dollar perked up, reportedly on hopes for US corporate outperformance
  • Heavyweight US data will dominate the rest of the global session

Asian shares were mostly in the green on Friday, with the sight of the Dow Jones Industrial Average still above the historic 20,000 mark working its magic once again.

Regional stock resilience came despite a stark illustration of US President Donald Trump’s more protectionist instincts. A social-media standoff between Trump and Mexican leader Enrique Pena Nieto has seen a meeting between the two scrapped. The White House has indicated that a 20% border tax on Mexican goods is under consideration, the proceeds of which could be used to pay for a controversial wall along the entire border between the two countries.

The Mexican Peso was clobbered again by this news on Thursday and continued its slide in the Asia/Pacific session.

However, Asia Pacific stock markets showed more resilience. The Nikkei 225 added 0.3%, apparently helped a little by December’s consumer price index. Although Japanese pricing power remain maddeningly elusive, the numbers were at least a little stronger than consensus. Australian shares also got a boost, with financials and raw materials on the up again. The Lunar New Year holiday kept mainland China out for the day, while the Hang Seng was flat after a half-day session.

The US Dollar was back in demand, with optimism over US corporate performance reportedly behind its pep. The Dollar index picked itself up from a seven-week nadir to get as high as 100.57 in Asia, while USD/JPY poked above the 115 level for the first time in four days.

Betting on USA Inc: USD/JPY meanders up through the Asian session

Chart compiled using TradingView

Gold plumbed two-week lows and is staring down the barrel of its first weekly drop in five. Crude futures were broadly flat in a session short of news for that market. Scheduled economic data for the rest of the session has a decidedly stateside flavor.

Investors will get a look at fourth-quarter GDP growth for the world’s largest economy. The markets are looking for a 2.2% annualized gain, much below the third quarter’s 3.5% rise, but probably enough for comfort. After that will come the latest snapshot of demand for durable goods, and the University of Michigan’s venerable consumer sentiment index brings up the rear.

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--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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