Asian stocks slip, dollar firms as Fed hints of policy turn

TOKYO Wed Nov 20, 2013 6:44pm EST

1 of 8. A visitor walks past logos at the Tokyo Stock Exchange in Tokyo June 13, 2013.

Credit: Reuters/Toru Hanai

TOKYO (Reuters) - Asian stocks stumbled and the dollar stood tall on Thursday after minutes from the U.S. Federal Reserve's October meeting hinted at stimulus tapering, while the euro was pressured by speculation of more easing by the European Central Bank.

Stocks dropped on talk of the Fed's stimulus withdrawal, with MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS and Australia's S&P/ASX 200 index .AXJO both shedding about 0.3 percent.

Federal Reserve officials indicated at the bank's October 29-30 policy meeting that they could decide to start scaling back the asset purchases at one of its next few meetings provided this was warranted by economic growth.

"The headline that most participants saw tapering in the next couple of meetings cannot be much of surprise, since the alternative is a virtual indefinite postponement," said Steven Englander, global head of G10 FX strategy at CitiFX.

"That said, the 5 percent probability associated with a December tapering seemed too low so there may have been an unwinding of somewhat overly dovish expectations," Englander wrote in a note to clients.

The dollar index, which tracks the greenback against a basket of major currencies, last stood at 81.032 .DXY after climbed 0.4 percent on Wednesday in its biggest one-day gain in about two weeks.

The euro was slightly lower at $1.3435, and was also buying 143.40 yen, well off a four-year high of 135.94 yen touched on Wednesday.

The dollar was a touch firmer against its Japanese counterpart, buying 100.13 yen.

The euro plunged on Wednesday after a Bloomberg report said the ECB was considering cutting its deposit rate, one of its two key interest rates, to below zero. An ECB spokesperson declined to comment on the report.

Late on Thursday, the Bank of Japan will conclude a two-day policy meeting. The central bank is expected to maintain its ultra-loose monetary policy and debate how weak exports and swinging expectations about when the Fed will taper its stimulus may affect Japan's economic recovery.

In commodities trading, Brent crude oil rose about 0.9 percent to $107.92. It surged by more than $1 a barrel on Wednesday after a U.S. official said it would be "very hard" to get a nuclear agreement with Iran this week.

U.S. oil futures for January delivery slipped about 0.1 percent to $93.78, after reversing gains on Wednesday following release of the Fed minutes.

(Refiles to fix typographical error in headline)

(Editing by Shri Navaratnam)

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Comments (2)
hexazebra wrote:
Stock markets like the easy money policy and people also like it. Why should the Fed. change the bond buying program all of a sudden after 5 years? If Mr. Bernanke can announce it as a permanent program then businesses can continue with their long term plans. Fed should also consider announcing more of such programs until unemployment rate reaches below 4%.

Nov 19, 2013 9:59pm EST  --  Report as abuse
Neurochuck wrote:
The print more money transfusion in the USA and Japan seems a bit like flying around in a plane, after the landing gear has fallen off.
Should the pilots switch off the engines and crash into a hill and get it over with, or try their best to land and crash and burn slowly and painfully, or just keep flying around until the fuel runs out ?

Nov 20, 2013 12:46am EST  --  Report as abuse
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