Election aftershocks: Dollar hits 14-year high
The dollar scaled to its highest level in almost 14 years against a basket of currencies on Friday, while U.S. bond yields were set for the biggest fortnightly rise in 15 years on bets U.S. inflation and interest rates are headed higher.
USviewer: A growing perception that the economic policies of U.S. President-elect Donald Trump will push up consumer prices helped put the dollar on track for its biggest two-week rise against the Japanese yen in almost 30 years.
European shares nudged lower in early European trade, while Italian bonds bore the brunt of selling in regional debt markets, with borrowing costs set for their biggest two-week rise since the 2012 euro zone debt crisis.
In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.4 percent to hover just above four-month lows touched earlier in the week. It looked set to log its fourth straight week of losses.
The dollar's rise against the yen raised hopes of an earnings boost to Japanese exporters, lifting Japan's Nikkei average to a 10-month high. The blue-chip stock index closed 0.6 percent higher.
Data on Thursday suggesting the U.S. jobs market is tightening and inflation is gaining traction have bolstered a view that U.S. growth and inflation could accelerate if the Trump administration cuts taxes and increases fiscal spending.
Last week's unexpected U.S. election result has prompted investors to ditch their once rock-solid conviction that growth in developed economies will remain tepid because of tough competition from emerging market economies with lower wages.
That has led to a repricing of assets, witnessed most notably in currency and bond markets.
"What we're looking at is a broad shift of investment back to the U.S.," said Richard Cochinos, Citi's head of G10 currency strategy in London.
"There are expectations for tax cuts next year - which were part of the Trump campaign's promises - and then there's also the idea of what type of fiscal boost are you going to have. That's what's driving asset prices – it's people's expectations for the fiscal impulse next year," he said.
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