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Dollar strength returns

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Fuseworks Media
Fuseworks Media

By Michael McCarthy (chief market strategist, CMC Markets)

Asia Pacific markets are set to add to recent gains as the world readies for US tax reform and the government in Japan is returned with a likely increased majority. Both developments are anticipated to increase fiscal stimulus, in turn supporting higher asset prices. The US dollar is at a three month high against the Japanese Yen.

The strengthening dollar pushed commodity prices lower and both precious and industrial metals slid. However oil bucked the trend and continues to drift higher in morning trading. Energy stocks could see strong support in today’s session. The swing factor for the Australian share market could be iron ore stocks. Iron ore traded higher on Friday but may reverse today, potentially tipping the Australia 200 index into the red.

The AGM season continues with Atlas Iron, Ansell and Auckland International Airports fronting shareholders today. Saracen minerals also releases its quarterly activity report. Futures are pointing to modest opening gains across the region, but currency trading could dominate. Any further gains for the US dollar may be viewed as a positive by investors.

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