U.S. Dollar Extends Losses as Stocks Gain

Asian stocks headed higher on Thursday, after Wall Street’s surge on Wednesday despite inflation data that indicated more interest rate hikes are looming. The Nikkei 225 gained 1.5 percent on Thursday before retreating slightly and was trading up 1.21 percent as of 1:53 p.m, the first positive day after three consecutive days of losses. HK/SIN. Australia’s ASX 200 was up 1.16 percent, South Korea’s Kospi was up 1.11 percent and the Shanghai Composite was up a still-respectable 0.46 percent early on Thursday afternoon. On Wednesday all three indexes on Wall Street closed up more than 1 percent, the fourth consecutive day of gains after falling steeply last week.

Stronger than expected inflation data released in the U.S. on Wednesday caused markets to open lower, but traders eventually ignored the data and continued their buying sprees. U.S. consumer prices rose more than predicted in January, fueling inflation concerns and the possibility of an interest rate hike sooner than originally expected. Reports on Wednesday also showed that U.S. retail sales declined 0.3 percent in January, the steepest decline in 11 months.

Currency Movements

The dollar continued its struggle on Thursday, falling 0.42 percent against the yen to 106.55, a level not seen since November 2016. The greenback gained slightly after Wednesday’s reports but quickly resumed its downtrend, heading lower against all of its primary trading partners. Traders are now questioning whether Japan will be forced to adjust its policies in light of the weak dollar and how exporters will react to the currency fluctuations. Still, most analysts are looking towards the 105 level before they expect any real changes to be made.

The euro gained 0.17 percent against the dollar by Thursday afternoon after gaining 0.8 percent on Wednesday. The British pound also gained 0.8 percent against the dollar on Wednesday and was up another 0.14 percent on Thursday.

Sara Patterson has a Master’s Degree in political science and enjoys analyzing both current events and the international markets to get a fuller perspective of the currency market. Before turning to financial writing, she taught English writing skills to high-school age students. Sara’s work has been published on various financial and Forex blogs.