Tokyo - Asian shares and the dollar
cautiously edged higher on Tuesday, as investors awaited
testimony from Federal Reserve Chair Janet Yellen for clues on
when the central bank would tighten U.S. monetary policy.
MSCI's broadest index of Asia-Pacific shares outside Japan
edged a few points higher in early trading, with
sentiment underpinned by technology-led gains on Wall Street.
Japan's Nikkei stock index was up 0.1 percent, while
Australian shares slipped 0.2 percent.
The dollar index, which tracks the greenback against a
basket of six major rivals, added 0.1 percent to 96.094
ahead of Yellen's semi-annual monetary policy testimony before
Congress on Wednesday and Thursday.
"Normalisation of monetary policy in the coming months is
almost priced in, and the Fed will start shrinking its balance
sheet in September, and this does not necessarily mean a delay
of rate hikes," said Masafumi Yamamoto, chief forex strategist
at Mizuho Securities in Tokyo.
"This is supporting the dollar as a positive factor, and
limiting its downside at the moment," he said. "I think Yellen
will confirm that rate hikes are coming, and that balance sheet
shrinkage will come."
Against its Japanese counterpart, the dollar added 0.2
percent to 114.21, moving back toward a two-month high of
114.30 touched overnight, while the euro inched slightly lower
on the day to $1.1393.
The Canadian dollar was nearly flat against its U.S.
counterpart as investors awaited a Bank of Canada interest rate
decision on Wednesday.
Forecasters are divided on whether the central bank will
raise rates but data from the overnight index swaps market shows
that money markets are almost fully priced for an increase,
while an 80 percent chance of a second hike has been implied by
December.
Crude oil prices extended their overnight gains, even as
increased drilling activity in the United States and uncertainty
over Libyan and Nigerian production cuts clouded the future
supply outlook.
U.S. crude futures rose 0.4 percent to $44.56 a
barrel after adding 0.4 percent on Monday, while Brent crude
was 0.3 percent higher at $$47.04.