Due to the possibility of another interest rate increase by the Federal Reserve as early as June it push the US dollar sharply higher against major Asian currencies Thursday, with the Chinese yuan at its weakest level since February and the Japanese Yep losing its recent gains. The U.S. dollar index rallied to a two-month high.
Experts didn't expect the possibility of an interest-rate increase in June, but the latest Federal Reserve minutes, along with a batch of strong economic data, have changed that view.
Asian currencies falls into multi-month lows as traders adjusted positions to reflect the interest-rate expectations. The Indonesian rupiah fall to its three-month low, as did Thailand’s baht, while the South Korea won, the Philippine peso and the Singapore dollar fall into two-month low against the U.S. dollar. The rise of the U.S. dollar also weakened the Japanese yen by nearly 1%.
MSCI's broadest index of Asia-Pacific shares outside Japan fall 1%, South Korea market fall by 0.6% while Australia were down by 0.8%.
Meanwhile, gold which are inversely correlated to monetary policy easing, fell 0.1% to a three-week low $1256 per ounce.
The stronger dollar also weighed on commodities such as oil, with U.S. crude futures losing 0.4% to $48.00 a barrel. A stronger dollar tends to put non-U.S. buyers of greenback-denominated commodities at a disadvantage.
Three-month copper on the London Metal Exchange fell to as low as $4563.50 overnight, the weakest since Feb. 19.
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