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- An index of Asian shares fell on Wednesday as copper prices tumbled and another bomb scare in Europe hurt risk appetites, while bets that the Federal Reserve remains on track for a rate hike bolstered the dollar. The greenback edged higher, close to seven-month highs against a basket of currencies as U.S. economic data also backed the case that the U.S. central bank is poised to increase interest rates next month for the first time in nearly a decade.The dollar’s strength undermined dollar-denominated commodities, making them more expensive for holders of other currencies. On Tuesday, Wall Street shares ceded earlier gains to end almost flat after news that German authorities called off a soccer game which German Chancellor Angel Merkel was due to attend, citing threats of bombing, sparking fears of another attack coming only days after the deadly assault in Paris.
- Japan’s Nikkei bucked the downtrend, adding about 0.8 percent as the yen shrugged off its traditional status as a safe-haven currency and edged down against a backdrop of divergent monetary policy expectations. In contrast with the Fed’s expected course of action, the Bank of Japan is expected to hold steady at its two-day policy meeting that began on Wednesday.
- The dollar index was up 0.1 percent at 99.693, after hitting a high of 99.745 on Tuesday, within sight of its 12-year peak of 100.39 set in March. U.S. consumer prices increased in October from the previous month after two straight months of declines, putting annual core inflation at 1.9 percent. Industrial output fell short of market expectations but the output in the manufacturing sector posted a solid increase. Moreover, latest data further highlighted the monetary policy divergence theme, with a rise in U.S. inflation reinforcing prospects of the Federal Reserve hiking interest rates next month. The market will sift through the October Fed policy meeting minutes due later in the session for hints on the timing of a possible rate hike. The dollar had surged after the Fed left the door open for a December rate hike at the meeting held late in October. The euro also slipped about 0.1 percent to $1.0633, just above Tuesday’s seven-month low of $1.0630, as the common currency continues to be undermined by expectations that the European Central Bank will take fresh monetary easing steps next month. Expectations of further central bank stimulus grew on Tuesday after ECB’s chief economist and executive board member Peter Praet told Bloomberg that he was aware of present downside risks and that they may have increased in light of the events in Paris.
- Crude oil prices edged up in early trading on Wednesday following reports of falling stockpiles and rising refinery activity, but analysts said the market would remain under pressure for the rest of the year and into 2016. Industry group American Petroleum Institute (API) said late on Tuesday that U.S. crude stockpiles fell last week by 482,000 barrels due to lower imports and higher refinery runs. This helped push front-month U.S. crude futures CLc1 up 31 cents from their last settlement to $40.98 a barrel at 0120 GMT. The gain followed an over $1 fall during the previous session. Official inventory data is due later on Wednesday from the U.S. government’s Energy Information Administration (EIA).
- China’s new home prices rose 0.1 percent in October from a year earlier, higher than the previous month’s drop of 0.9 percent, an official survey showed on Wednesday, marking the first year-on-year gains in over a year.Compared to a month earlier, home prices in October rose 0.2 percent, easing from September’s gains of 0.3 percent, according to Reuters calculations based on data from the National Bureau of Statistics(NBS). New home prices in Beijing in October rose 6.5 percent from a year earlier, while those in Shanghai increased 10.9 percent. China’s property market accounts for around 15 percent of output so even modest signs of improvement would help boost the cooling economy.