Asian Shares Buoyed by ECB Easing Hopes, Euro Soft

The euro was soft at $1.1545, having fallen from above $1.16 touched on Tuesday to get closer to an 11-year trough of $1.14595 set last week.

Published: 21st January 2015 08:23 AM  |   Last Updated: 21st January 2015 08:23 AM   |  A+A-

Asian share-US-AP

American flags fly in front of the New York Stock Exchange. AP

TOKYO: Asian shares held firm and the euro stayed under pressure on Wednesday as investors counted on the European Central Bank to unveil a stimulus drive, while the yen was subdued ahead of the Bank of Japan's policy announcement later in the Asian day.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent, although Japan's Nikkei slipped 0.4 percent from a two-week closing high hit on Tuesday after heavy gains in the previous two sessions.

Global share prices have been supported in recent sessions on growing investor conviction that the ECB will adopt quantitative easing at its meeting on Thursday.

The FTSEurofirst 300 index of top European shares climbed to a seven-year high on Tuesday, led by German shares, which hit record highs.

The euro was soft at $1.1545, having fallen from above $1.16 touched on Tuesday to get closer to an 11-year trough of $1.14595 set last week.

But before the ECB's plan is known, the BOJ is expected to maintain its monetary base target while possibly expanding two expiring loan schemes to support bank lending when it concludes its two-day policy meeting on Wednesday.

Still, given BOJ Governor Kuroda's history of surprising markets, some traders are playing safe by selling the yen.

"The BOJ could well extend the loan support fund along with downward revision to its core inflation forecast," said analysts at Citi.

"It could even expand the loan support fund and extend the duration given the extremely low and flat yield curve, as it does not want to give the impression of standing idle."

The Japanese currency stepped back further from one-month high of 115.85 to the dollar hit last week and last stood at 118.69.

On the other hand, gold held near a five-month high after a 1.3 percent rise on Tuesday, supported by expectations of ECB money-printing. It last traded at $1,293.93 per ounce, just below its Tuesday high of $1,296.85.

Commodity prices remained under pressure, however, falling as much as 5 percent at one point on Tuesday after the International Monetary Fund cut its 2015 global economic forecast.

Also souring sentiment, key producer Iran hinted prices could drop to $25 a barrel without supportive OPEC action.

Benchmark Brent crude last traded at $48.17 a barrel, slipping towards a six-year low of $45.19 hit last week.

 

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