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Asian shares softer before US jobs data, dollar steady

Investors await jobs data as it could shape Fed's stance on withrawal on stimulus

Reuters Tokyo
Asian shares pulled backed from a five-month high and the dollar stabilised after recent heavy losses as markets waited for US jobs data that could shape expectations as to whether the Federal Reserve will start withdrawing stimulus this year.

Investors were expected to be reluctant to make aggressive bets after US stocks ended little changed, partly on concerns that equities have become overpriced after the S&P 500 index's run to record highs last week.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.3%, dropping from a five-month peak. Technical charts indicated it remained in "overbought" territory, indicating there could be a further retreat.

 

Tokyo's Nikkei share average dipped 0.2%.

Australia's S&P/ASX 200 gained 0.3%, hitting a five-year high for a third day in a row and putting it on track for a sixth day of gains, which would be its longest such run since July.

Analysts polled by Reuters expect US nonfarm payrolls to have increased by 180,000 in September, with the jobless rate steady at 7.3%. The data's release has been delayed from October 4 by the 16-day US government shutdown.

Many analysts expect the US central bank to maintain its quantitative easing (QE) given the as yet unknown economic impact of the shutdown and the possibility of another bitter budget fight early next year, although a strong employment report could challenge that thinking.

"The common view in the market is that US is essentially trapped in QE," said Perth-based Andrew Quin, research strategy coordinator at Patersons Securities.

"So at least until new debt ceiling negotiations get agreed probably in February, we doubt they are going to do too much with QE between then and now."

A senior Fed official said it would be "tough" for the Fed to have sufficient confidence in the strength of the US recovery by its meeting in December to start reducing its $85 billion-per-month bond-buying programme.

DOLLAR FINDS SUPPORT

The dollar was at $1.3666 to the euro, off an eight-month low of $1.3704 marked on Friday, and was holding largely steady at 98.28 yen after bouncing 0.4% in the previous session.

Against a basket of major currencies, the dollar inched up 0.1%.

"A (jobs) reading anywhere in the 160,000 to 190,000 range would probably be fairly neutral with respect to near-term US dollar direction given the data pre-dates any impact from the October shutdown," analysts from BNP Paribas wrote in a note

"We remain short euro/dollar and sterling/dollar heading into the release, looking for gradual improvement in US data and dovish messaging from European policy makers to revive the policy divergence theme which benefited the dollar in the second quarter," they added.

US crude prices dipped 0.2% to about $99 a barrel, hitting a near four-month low and adding to the previous session's 1.6% decline.

Gold was little changed at around $1,313.9 an ounce.

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First Published: Oct 22 2013 | 7:53 AM IST

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