Asia equities under pressure as crude oil steadies

Tuesday 03:40 BST

What you need to know

  • Dollar weakens further as Obamacare repeal under threat
  • Stronger yen and Australian dollar undermine Asia equities
  • Australian sovereign bonds lower after RBA minutes
  • Oil prices steady after late-session drop on Monday

Overview

A renewed bout of weakness for the US dollar drove the euro to a nearly two-year high and threatened to push the Japanese yen past the ¥112 mark after two Republican senators came out against their party’s Obamacare repeal bill.

Relative strength for local currencies helped drive down equities in Asia, while crude oil prices firmed after a late-day drop on Monday.

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The euro shot through $1.15 against the dollar and the yen threatened to surpass ¥112 after two more Republican senators said they would bet against the healthcare bill — a key pledge of US President Donald Trump’s election campaign — unveiled by their party last week.

The euro, at $1.1470 as activity picked up in Hong Kong and Singapore, jumped to $1.1525 against the US currency in less than an hour — a sharp move in a normally slow part of the trading day. The advance put the single currency at its highest point in nearly two years. The Japanese yen went to ¥112.15 — its lowest in two weeks — from ¥112.6.

China’s renminbi reached a fresh eight-month high, hitting Rmb6.7596 against the dollar, its highest point since November, in the onshore market.

The Australian dollar meanwhile touched a two-year high against the greenback at $0.7873 following the release of minutes from the RBA’s June meeting, while the yield on 10-year Australian government bonds climbed 4 basis points to 2.767 per cent. Bond yields move inversely to price.

Commenting on the Australian dollar’s rally, Rodrigo Catril, currency strategist at National Australia Bank, said: “You could say that maybe 40 per cent of it is US dollar weakness and 60 per cent is a function of the RBA minutes.”

The dollar index, a trade-weighted…

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