* Asia shares aided as Wall St recoups post-Fed losses
* Dollar underpinned as short-term US yields hit 6-mth peak
* China's yuan heads for sharpest fall in two decades
* Quartet of Fed speakers set to test market nerves
By Wayne Cole
SYDNEY, March 21 Asian markets will be hoping
for a bounce on Friday after Wall Street shook off concerns
about Federal Reserve policy, while a rise in U.S. yields should
keep the dollar underpinned near three-week highs.
After falling sharply on Thursday, the early signs were that
stocks in the region might at least be able to stabilise.
The Australian market edged up 0.3 percent while
MSCI's broadest index of Asia-Pacific shares outside Japan
was dead flat.
Investors should find some comfort in Wall Street's ability
to bounce with the S&P 500 closing up 0.6 percent and the
Dow 0.67 percent.
Unfortunately for Japan's Nikkei it will not be able
to share the relief since the country is on holiday on Friday.
The U.S. dollar continued to benefit from Fed Chair Janet
Yellen's suggestion that the first increase in interest rates
could come in the first half of 2015, which would be earlier
than many had expected.
Just the thought of such a prospect was enough to lift
two-year Treasury yields to their highest in six
months and left them up 8 basis points for the week so far.
Markets will thus be hyper sensitive to comments from a
quartet of Fed speakers later on Friday. St. Louis Fed President
James Bullard, Dallas Fed President Richard Fisher, Minneapolis
Fed President Narayana Kocherlakota and Fed Governor Jeremy
Stein are all due to talk.
Clarity may not be forthcoming, however, as each has very
different outlooks on policy stretching from the hawkish Fisher
to the dovish Kocherlakota.
Against a basket of major currencies, the U.S. dollar was
trading at 80.186, not far from the high of 80.354, a
level not seen since late February.
The euro wallowed at $1.3777, having plumbed a
two-week low of $1.3749. It was on track to post a 1.0 percent
drop this week.
Not helping the common currency, European Central Bank
Executive Board member Sabine Lautenschlaeger said rates will
remain low or go even lower for an extended period.
The U.S. dollar was steady on the yen at 102.39
having topped out at 102.69.
HOW FAR WILL IT FALL?
Attention in Asia will again be on China's yuan
which hit a one-year low on Thursday with the People's Bank of
China (PBOC) seemingly content with the decline. The currency
has fallen more than 1.2 percent this week, which would be the
largest weekly loss since 1992.
Government economists and advisers involved in internal
policy discussions told Reuters that the central bank chose to
widen the yuan's trading band since it was less risky than other
reform options while also offering a way to hedge against
further economic slowdown.
A weaker yuan would provide some relief to struggling
exporters and the PBOC has the means to steer it lower while
avoiding sharp swings.
However, a major drop in the yuan could put pressure on
other nations in the region to depreciate their currencies and
keep their exports competitive.
Several currencies from the Thai baht to Malaysian ringgit
did indeed turn lower on Thursday and dealers will be watching
nervously to see if that could be the start of a trend.
In commodity markets, Gold was pinned at $1,330.60 an ounce
having shed 3.7 percent for the week so far.
Brent rose 60 cents to settle at $106.45 a barrel on
Thursday. U.S. crude for May delivery was 28 cents lower
at $98.62 per barrel.
(Editing by Shri Navaratnam)