Asia: Most markets up, dollar holds gains despite North Korea fears

[HONG KONG] Most Asian markets edged up on Wednesday and the dollar held gains against its peers on expectations for further interest rate hikes while traders await the release of Donald Trump's tax reform plan.

Shares were in positive territory but US-North Korea tensions are still jangling nerves and keeping investors were from buying with any gusto in early exchanges.

Hong Kong added 0.5 per cent, Seoul edged up 0.1 per cent and Singapore rose 0.3 per cent but Tokyo went into the break 0.3 per cent lower, while Sydney was also down 0.3 per cent. Shanghai was barely changed.

However, the yen - which surged on Tuesday on safe-haven buying after Pyongyang accused Mr Trump of declaring war on it and said it would down US bombers - was being pegged back by the dollar in Tokyo.

The greenback returned to favour after Federal Reserve boss Janet Yellen indicated the bank would press on with its plan to lift borrowing costs, saying the US economy was strong enough to withstand it.

Analysts said her comments suggested she did not want to take too long to raise rates and end up having to introduce sharper increases down the line - which could risk a recession.

"In lay terms: 'we just can't wait till we see the whites of inflation's eyes, that would be too late'," said Greg McKenna, chief market strategist at AxiTrader.

The dollar rose well above 112 yen in New York on Tuesday, having sat around the 111.50 yen level earlier in the day.

And in Asia the US unit stood its ground ahead of the long-awaited release of details on Trump's tax plan, which he said would cut the burden "not just a little bit, but tremendously" for the middle class.

His market-friendly promise to cut taxes, ramp up infrastructure spending and slash red tape helped drive a global rally after his November election but a series of crises and setbacks in Congress have thrown his agenda off track.

The greenback was also up against the euro, which has taken a hit this week from traders worried about the difficulties German Chancellor Angela Merkel will have putting together a coalition in Europe's biggest economy, and the implications for the eurozone.

Dr Merkel won a fourth term on Sunday but a hard-right opposition party entered parliamentary for the first time.

The single currency is sitting below US$1.18 at a one-month low, having been above the US$1.20 mark on Friday.

AFP