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Dollar up on US rate hike talk, but Asian markets edgy
[HONG KONG] The dollar pushed higher in Asia on Monday as investors increased their bets on a US interest rate hike by the end of the year, but stock traders were more reticent ahead of the corporate earnings season.
With the US economy showing increasing signs of recovery, experts say a Federal Reserve lift in December is all but certain, helping the greenback clock up healthy gains in recent weeks.
"A number of positives continue to accrue for the US dollar, foremost of which is the relative health of growth around two percent and the very strong signals being pushed by the Fed that it will be raising rates in December," Greg McKenna, chief market strategist at FX and CFD provider AxiTrader, said in a note.
Speeches by several Fed officials later in the week will be pored over for more clues about the bank's plans for rates, particularly the pace of any further rises next year.
In early Asian trade the dollar was flirting with 104 yen, while the already-struggling pound was sitting below US$1.22. The euro suffered fresh losses after Friday's sell-off fuelled by speculation the European Central Bank will unveil fresh stimulus measures in December.
The US unit was also up around 0.1 per cent against most high-yielding, riskier, currencies, including the Australian dollar, South Korean won and Malaysian ringgit.
Equity markets swung in and out of positive territory as companies prepare to report earnings, with Japanese gaming giant Nintendo and South Korea's under-pressure Samsung Electronics due this week.
Tokyo's Nikkei was flat by lunch, while Hong Kong added 0.2 per cent and Sydney shed 0.7 per cent. Shanghai added 0.5 per cent and Seoul was up 0.3 per cent. Singapore gained 0.2 per cent while Manila sank one per cent.
Dealers are also keeping an eye on the upcoming US presidential election.
While market favourite Hillary Clinton is well ahead in most opinion polls, Stephen Innes, a senior trader at Oanda, warning of an equity rout if they are wrong and her firebrand opponent Donald Trump wins on November 8.
On oil markets both main contracts dipped on remarks from Iraq's oil minister saying the country should be exempted from a planned Opec output cut because it is in the middle of a war with Islamic State militants.
However, they did earn a measure of support from Saudi Arabia's oil minister saying the current cycle of falling prices is close to an end as market fundamentals improve.