Asian stocks follow US markets higher

Monday, December 22, 2014

Asian stocks headed higher overnight with the majority of equity benchmark indices advancing off of Friday’s close as investors took the lead from a firm session on Wall Street at the end of last week. Japanese indices managed to hold onto near term support levels, with the bullish tones cooling somewhat after last week’s extensive rally while the Hang Seng traded 1.15% higher at the time of writing and mainland Chinese stocks were up between 0.3-0.6% having added as much as 1.6% early on.

The overall mood remains cautiously optimistic as investors continue to mull over last week’s comments from the US Fed with many taking the comments of low interest rates at least for the near term as a cue for increasing risk appetite. The more hawkish than expected outlook after last week’s FOMC meeting concluded has given market participants the necessary clarity and forward guidance for an eventual interest rate rise and could see demand for higher yielding assets improve steadily throughout the remainder of the year.

The US dollar gained further ground against most major currencies last week as the dollar index posted its best weekly performance for the year so far, adding 1.59% as the greenback gained further ground against the euro and yen. The dollar index closed at a fresh year-to-date high of 89.598 with gains against the euro pushing the single currency back towards levels last seen in August 2012.

The yen weakened against the dollar for the fourth straight session with activity overnight and early this morning seeing the yen hold onto Friday’s close as it traded towards 119.66 against the dollar. However, investors in the dollar index will approach further moves on the upside with caution as recent activity suggests increased market volatility which could see sharp swings as investors consolidate and profit take before repositioning themselves.

DXY rallies against major peers reaching fresh year-to-date high

DXY Curncy DOLLAR INDEX SPOT 2014 12 22 07 31 48

JPY extends declines against USD

JPY Curncy Japanese Yen Spot 2014 12 22 07 49 53

Events for today

1330

US

Nov

Chicago Fed

1500

US

Nov

Existing Homes Sales

1500

EZ

Dec

Consumer Confidence

Topics: US Fed, EUR, JPY, DXY
More from: Kash Kamal