Stocks rise, dollar hits as Fed prepares to cut interest rates By Reuters

By Tom Westbrook

SINGAPORE (Reuters) – Asian shares rose while the dollar was pegged to one-year lows against the pound and the euro on Thursday as minutes from the Federal Reserve showed policymakers were poised to start cutting interest rates from US.

The minutes said a “vast majority” believed that if the data came in as expected, a September cut would likely be appropriate, and in response, US stocks rose, bonds rose and the dollar fell.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2 percent in early trade and rose 1 percent. Hong Kong rose 0.7%.

The euro settled at $1.1151 and traded as high as $1.1173 overnight, its highest since mid-last year, above chart resistance at $1.1139 and with the path open to a 2022 high around 1 ,1276 dollars. Sterling bought $1.3096 and touched a more than one-year high of $1.3119 overnight. (GBP/)

“The unequivocal signal from the (Fed) minutes was the catalyst for the latest leg of the US dollar’s decline,” said Ray Attrill, head of currency strategy at National Australia Bank (OTC:).

“The break above $1.30 on cable is likely to look sustainable and similarly for the euro … we are talking about a potential range of $1.10-$1.15 in the coming weeks,” he said .

Checks on dollar weakness could come from US jobs data on September 6 or even PMI data due later today if it confounds the market’s interest rate cut bets or shows softness in Europe which weighs euros, he said. .

Japan’s flash purchasing managers’ index (PMI) showed a decline in activity, albeit just barely, and an expansion in services.

Interest rate futures markets have fully priced in a 25 basis point rate cut in the US next month, with a 1/3 chance of a 50 basis point cut and more than 200 basis point cuts by in July 2025.

Treasuries rose overnight on the Fed minutes and a large – though expected – downward revision to the US hiring numbers over the past year.

Ten-year yields were broadly flat at 3.81 percent on Thursday in Asia, and two-year yields were flat at 3.94 percent.

US and European stock futures were broadly flat and commodities sounded a note of caution.

Futures have fallen nearly 6 percent so far in August to $76.04 a barrel and are close to testing year-to-date lows as stock markets and the prospect of weaker demand in China fueled pessimism. (OR)

“Soft landings are the exception, not the rule, and the first 200 days after the first rate cut tend to be challenging for stocks as they signal a deterioration in the growth and earnings environment,” said Nick Ferres, CIO at Vantage Point Asset Management from Singapore.

The weak dollar kept gold above $2,500 an ounce. Shares in Australian miner Whitehaven Coal rose 8 percent after it announced the sale of a $1 billion stake in its Blackwater mine in Queensland to Japanese steelmakers.

South Korea’s central bank left interest rates on hold as expected, but is setting the stage for cuts as it downgraded growth and inflation forecasts.