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Rising USD undermines investors

Asia Pacific share markets will come under pressure today after selling on European and US exchanges. Currencies are dominating trader discussions. The USD is firmer after FOMC minutes were confirmed hawkish, and GBP is bouncing as markets recoil from a “hard Brexit”. Weakness in oil and metals markets could further sour sentiment.

A December lift in US rates is assured at current economic settings. The meeting minutes hails consensus, but three members dissenting with the decision to maintain rates in September is the highest level of disagreement since 2014. Markets are now reflecting a higher than 80% chance of a December move. Curiously, a November rate rise is assessed at only 17%. Traders clearly believe the election a week after the November meeting precludes a move.

Futures markets are pointing to mild losses across the region at the open. The exception is Japan, where a weaker JPY is goading the bulls. Support for local shares may come from international investors as a lower AUD adds appeal.

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