Dollar slips in Asia as market frets on United States fiscal outlook
- Author: Leroy Wright Mar 28, 2017,
Mar 28, 2017, 12:55
Gold rallied more than 1 percent on Monday after U.S. President Donald Trump's failure to push through a healthcare reform package on Friday raised questions over his ability to deliver promised tax cuts and spending plans.
The euro was up 0.4 per cent on the dollar at $1.0842, the strongest since December 8.
MSCI's all-country world equity index was down 0.16 as the fall in risk appetite dominated Asian and European stock markets.
Trump's failure to rally enough support from his own Republican party to repeal and replace Obamacare spurred a rush to safe haven assets such as gold, the Japanese yen and the Swiss franc.
China's net gold imports via main conduit Hong Kong rose 50.8 percent month on month in February to 47.931 tonnes, data showed.
Nasdaq 100 e-minis were down 40 points, or 0.74 percent, on volume of 43,598 contracts.
European shares were hit by losses among miners and banks.
On currency markets the greenback fell against its major peers and most high-yielding units, with the South Korean won up 0.9 percent, Malaysia's ringgit 0.3 percent higher and the Indonesian rupiah up 0.2 percent. The index had risen to a 14-year high near 104.00 early in January when expectations for significant stimulus under the Trump presidency were at their peak. Brent crude, the worldwide benchmark, was off 0.2 per cent at $50.72 a barrel while the U.S. marker, West Texas Intermediate, was down 0.3 per cent at $47.82.
Japan's Nikkei, though, fell 1.5 per cent as the yen rebounded in the face of renewed United States dollar weakness.
Platinum climbed 0.3 percent to $965.90 per ounce.
Regional government debt was benefiting, with the yield on Australian 10-year bonds falling 6 bps to 2.690 per cent while that on Japan's equivalent government bond was down 1 bp at 0.049 per cent. Yields earlier fell to 2.348 percent, their weakest level in one month.
Gold is highly sensitive to rising US rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.
"The recent hiccup on the policy front casts serious doubt on the administration's ability to push forward its ambitious policy agenda", said Bruno Braizinha, interest rates strategist at Societe Generale in NY.
Spot platinum gained 0.5 percent to $965.50, after rising to $982.60, a three-week high and around the level where the 50-day and 200-day moving averages almost converge.
Meanwhile, oil fell further towards $50 a barrel, pressured by uncertainty over whether an OPEC-led production cut will be extended beyond June in an effort to counter a glut of crude.