The dollar firmed on Monday and most Asian markets surrendered early gains as investors cautiously awaited U.S. economic data and speeches by Federal Reserve officials this week that could signal more interest rate increases than expected.
European markets are closed for the Easter Monday holiday.
U.S. stock futures ticked up 0.3 percent, although they remain flat for the quarter.
In the past week, the dollar has been helped by stronger-than-expected gross domestic product data and comments from some Fed officials indicating that policymakers think they could raise interest rates as early as next month.
The dollar index against a basket of six major currencies rose as high as 96.339, its highest in almost two weeks. It was last trading up 0.1 percent at 96.273.
“Fed officials generally looked to share views that they need to maintain a rate hike path given a U.S. recovery,” said Jeong My-young, Samsung Futures’ research head in Seoul. The dollar rose 0.4 percent to 113.51 yen, keeping intact its steady recovery from a 6-1/2-month low of 110.67 hit on March 17 after a Federal Reserve meeting that left markets convinced U.S. interest rates would not rise soon.
The yen weakness gave Japan’s Nikkei a 0.8 percent boost to its highest close in two weeks.
Japan was the region’s sole winner. With share markets in Australia, New Zealand and Hong Kong closed for holidays, the MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.1 percent.
Shares in Korea ended the day little changed, and Taiwan gave up earlier gains to close down 0.2 percent.
Chinese stocks also reversed course, with the Shanghai Composite index falling 0.3 percent and the CSI 300 losing 0.4 percent.
Indonesia, Singapore, Malaysia and the Philippines all extended losses, trading between 0.3 percent and 1.2 percent lower.
U.S. GDP increased at a 1.4 percent annual rate in Oct-Dec, above the previously reported 1.0 percent pace, driven by fairly strong consumer spending, the third GDP estimate showed on Friday.
U.S. PCE inflation data due at 1230 GMT could further fan expectations of an early rate move if it shows increasing inflationary pressure.
“The PCE inflation has been rising of late. The Fed has said the prices will be the key in determining policy so the data should attract a lot of attention,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.
The annual core PCE inflation rose 1.7 percent in January, the fastest pace since July 2014.
The data will be followed by a speech from Federal Reserve Chair Janet Yellen and a few other Fed policymakers on Tuesday, making the Fed’s policy the biggest focus for now. [FED/DIARY]
Given that money markets are pricing in only about a 50 percent chance of a rate hike by the Fed in June, with hardly any significant likelihood in April factored in, signs of a tightening in the next quarter could rattle financial markets.
Gold, which earlier fell to a one-month low, recovered some of those losses to trade down 0.2 percent at $1,216.10 an ounce.
The euro was little changed at $1.1163, not far from Thursday’s one-week low of $1.1144.
The Australian dollar advanced 0.3 percent to $0.7525 having lost 1.4 percent last week and knocked away from an eight-month high of $0.7681.
Oil prices, which have risen about 50 percent since multi-year lows hit in January, extended their gains in thin trading, powered by major producers’ plans to freeze output at January’s highs.
U.S. crude futures gained 1.3 percent to $39.96 per barrel, and Brent advanced 1.2 percent to $40.91.