Asian shares shrugged off early losses on Wednesday, as the yen touched an almost eight-month low and bonds in the region tracked Treasuries lower amid signs of strength in the U.S. economy. Chinese shares jumped after gauges of services activity rebounded, while crude oil rallied.
The dollar was close to 14-month highs against a basket of major currencies after data underscored that the U.S. economy continues to gather gradual momentum. The U.S. dollar index, which tracks the dollar's value against seven major currencies, has rallied nearly 4 percent since the beginning of July on positive U.S. economic sentiment. On Tuesday, the index hit an over one-year high of 82.930, following lackluster performance in the first four months of the year when it slumped 1.2 percent.
Strong USD
Expectations are that U.S. monetary policy will continue to diverge from policy in Europe and the U.K. sending the dollar index even higher. The greenback was trading at $1.3121 against the euro, $1.6584 against sterling and at 104.81 yen on Tuesday. Analysts are expecting that by the end of 2015 the dollar will have strengthened further to $1.25 against the euro, to $1.60 against sterling, and to 120 yen.
The MSCI Asia Pacific Index rose 0.5 percent by 2:04 p.m. in Tokyo, as Hong Kong’s Hang Seng Index advanced 1.5 percent. Standard & Poor’s 500 Index futures were little changed after the benchmark U.S. index slipped 0.1 percent from a record. The yen fluctuated after falling to as low as 105.31 per dollar, boosting Japanese shares. Yields on 10-year Australian debt added nine basis points. Oil in New York rebounded 0.3 percent and gold climbed from the lowest level since June.
The Hang Seng Index climbed back above 25,000 and a measure of Chinese companies listed in the city advanced 2.1 percent. The Shanghai Composite Index added 0.6 percent and is heading for its highest close since June last year.