SINGAPORE- Asian shares wobbled in cautious trade on Tuesday ahead of a series of data releases and central bank meetings, which began with a surprise rate hike in Australia that boosted the local dollar.
Markets were positioned for Australia’s central bank to stay on hold and a 25 basis point hike sent the Aussie dollar up about 0.8 percent to its highest in a week at $0.6692.
Three-year Aussie government bond yields also jumped, while Australian stocks slipped 0.7 percent.
“One of the things that sticks out to me is that they’re still saying they might need to increase interest rates,” said Commonwealth Bank of Australia strategist Joe Capurso.
“So as well as the increase today, that’s supporting the Aussie dollar,” he said, though he warned that could unwind as there’s a “reasonable chance” the Federal Reserve takes a similar approach at its meeting on Wednesday.
Elsewhere there were jitters at short tenors in the US Treasury market as the government’s borrowing ceiling looms, and MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was flat.
Mainland China markets were closed. Japan’s Nikkei .N225 hit a 16-month high, before backing off slightly, with the bank sector .IBNKS.T a drag. .T
Besides the Aussie, the yen steadied after two sessions of heavy falls following the Bank of Japan’s decision on Friday to stick with ultra-easy monetary policy for the time being. FRX/
The policy stands in contrast to the US and Europe where central banks are deep into a hiking cycle and still going, and the contrast with Australia sent the Aussie up nearly 1 percent on the yen AUDJPY=.
The yen fell through its 200-day moving average on Tuesday and hit an almost two-month low on the dollar early on Wednesday before steadying at 137.40.
The Japanese currency made a fresh 14-1/2 year trough at 151.08 per euro EURJPY= on Tuesday and is trading at its lowest recorded on the Swiss franc CHFJPY= in Refinitiv data stretching back to the early 1980s.
The euro held at $1.0987.
Much of Europe also returns from May Day holidays on Tuesday, with final activity surveys due, preliminary inflation figures and a survey of European bank lending that will be closely watched given recent stresses in the sector. — Reuters
