Asian stocks pulled ahead on Friday after US data continued to put the economy in a positive light, while the dollar was on the defensive against major peers.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.2 per cent to a two-week high. The index was on track to rise 2.2 per cent this week.
Japan’s Nikkei nudged up 0.4 per cent, buoyed by prospects of Tokyo delaying a sales tax hike, helping to extend gains for the week to 1.5 per cent.
China’s CSI300 and Shanghai Composite indices both slipped by 0.1 per cent, set for declines of 0.6 per cent and 0.3 per cent, respectively for the week.
The Hong Kong Hang Seng index was also down 0.3 per cent, but remains on track for a jump of 2.4 per cent for the week.
The Dow Jones Industrial Average inched down 0.1 per cent and the S&P 500 ended flat overnight after rising strongly for two days as advancing utilities offset declines in materials, banks and other cyclical industries.
US economic data
US data on Thursday showed durable goods orders, pending home sales and initial jobless claims coming in strong, while capital goods orders and the Kansas City Fed manufacturing survey were weak.
“The markets have been attentive to clues on US economic conditions. Positive data will signal that conditions may be ripe for a rate hike as soon as in the June Federal Open Market Committee (meeting),” said Bernard Aw, market analyst at IG in Singapore.
“Market participants will be hyper-sensitive to US data, with next week’s inflation data and employment data to be scrutinised,” he said.
Dollar vs yen
The dollar rose 0.2 per cent to 109.92 yen after losing 0.4 per cent overnight. It is on track for a fall of 0.2 per cent for the week.
The euro treaded water at $1.1183 following Thursday's 0.3 percent gain, but is set for a weekly loss of 0.4 percent.
The dollar index was nearly flat at 95.236 after slipping 0.3 per cent overnight, pulling away from a two-month high of 95.661 scaled on Wednesday. It's poised for a 0.1 percent loss for the week, but up 2.3 percent this month.
Fed rate hike
The greenback had rallied earlier in the week on growing expectations the Federal Reserve will raise interest rates as soon as June or July, supported by a series of comments from Fed officials seemingly backing such a move.
The financial markets are now looking to the revisions of US first quarter GDP data and comments from Fed Chair Janet Yellen at a Harvard University-sponsored event later on Friday.
“Given the uniformity of comments from policymakers, we don’t think Yellen will throw cold water on rate hike expectations and could in fact reinforce them,” wrote Kathy Lien, managing director of FX strategy at BK Asset Management.
“Economists are also looking for first quarter GDP growth to be revised higher so today's pullback in the dollar should be temporary.”
The Australian dollar slipped after rising overnight on a modest upgrade in domestic capex data. The Aussie, which fell to a near three-month low of $0.7145 on Tuesday amid a slide in commodities, was last down 0.1 percent at $0.7216.
Crude oil
In commodities, crude oil went into consolidation mode after prices hit $50 a barrel overnight for the first time in seven months.
Brent crude was down 0.8 per cent at $49.21 a barrel after surging to as high as $50.51 on Thursday. It’s headed for a 1 per cent gain for the week.
US crude also slipped 0.4 per cent to $49.13 after climbing to as $50.21 in the previous session, and is set for a weekly rise of 2.9 per cent.
Wildfires in Canada’s oil sands area, unrest in the Nigerian and Libyan energy sectors, and a near economic meltdown in OPEC member Venezuela have knocked out nearly 4 million barrels per day in immediate production, sparking a buying frenzy in crude futures.
The rise in risk appetite this week has weighed on gold, with the precious metal headed for its biggest decline in nine weeks.
Spot gold slipped 0.6 per cent to $1,213.10 per ounce, close to an eight-week low of 1,211.30 seen earlier in the session, and on track for a slide of 3.1 per cent for the week.