Asia markets mixed as dollar remains soft

Tuesday 01:50 GMT

Overview

Asia-Pacific bonds strengthened and equities markets were mixed, as the US dollar remained soft against regional currencies and oil prices stabilised.

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Australian government bonds were lower after minutes from the Reserve Bank of Australia’s March meeting showed the central bank had become more concerned about the domestic housing market and less optimistic on the prospects for wage growth and inflation.

The yield, which moves inversely to price, on the 10-year government bond was down 2 basis points at 2.794 per cent. The yield on the corresponding New Zealand bond was down 3 bps at 3.174 per cent.

Paul Dales, chief Australia and New Zealand economist for Capital Economics, said the RBA was beginning to wonder whether inflationary pressures are more subdued than thought.

“This is one of the conditions that would be necessary to trigger further rate cuts,” he said.

Elsewhere in the region, the yield on the 10-year South Korean government bond was down 1bp at 2.17 per cent, while that on the equivalent Japanese government bond was down 1bp at 0.056 per cent.

Forex

The dollar was softer against regional currencies, still under pressure after the US Federal Reserve raised rates last week but stuck to its projections regarding the pace of future tightening. The dollar index, which measures the greenback against a basket of peers, was down 0.3 per cent at 100.3.

The South Korean won led gains, firming 0.3 per cent to Won1,116.36 per dollar as ex-president Park Geun-hye arrived at the prosecutor’s office in Seoul for questioning. The won is 1.4 per cent stronger for the week so far.

The Japanese yen was flat at ¥112.57 per dollar, after briefly rising to its strongest point since February 28. The Australian dollar was off 0.1 per cent at $0.7723.

Equities

Stock markets were mixed after a muddled lead from Wall Street, where the S&P 500 index fell 0.2 per cent on Monday but the tech-heavy Nasdaq touched a record intraday…

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