Asian stocks rise, dollar languishes near two-year Fed lows By Reuters

By Swati Pandey

SYDNEY (Reuters) – Asian stocks were buoyed by the promise of ultra-easy monetary policy globally, as the US Federal Reserve left interest rates close to zero to support the country’s economy hit by the virus, which brought the dollar to a two-year low.

All Fed members voted to leave the target range for short-term rates between 0% and 0.25%, where it has been since March 15 when the virus began to affect the nation.

The establishment of an unchanged policy along with a promise that the Fed would use its “full range of tools” if necessary boosted risk appetite overnight with all three Wall Street indices finishing firmer. () () ()

Confidence spread in Asia, where Japan’s Nikkei () and South Korea’s KOSPI (0.3%) rose 0.3% each, Australia’s leading index () rose 0.7%, and Hong’s Hang Seng index Kong () increased 0.2%.

Chinese stocks were slightly firmer, leaving MSCI’s broader index of Asia Pacific stocks outside Japan () 0.4%.

“There is no doubt that the Fed’s strong presence in the markets has provided risky assets with support to stop tightening financial conditions,” said perpetual analyst Matthew Sherwood.

“But they (the Fed) don’t have any tools to design a recovery, which means fiscal policy will need to stay in place to support household incomes, especially as unemployment could rise in the coming months as the real impact. of shock in the labor market is revealed. “

In fact, negotiations for a new coronavirus relief package in the United States have become a pressing problem for investors.

United States President Donald Trump said Wednesday that his administration and Democrats in Congress were still “very far apart” on a new coronavirus relief bill.

Policymakers and investors also closely monitor the coronavirus trajectory with many countries, including the United States, which still report a record number of COVID-19 cases and deaths each day.

In currencies, the largest engine was the dollar.

The dollar () has been falling on expectations that the Fed will continue its ultra-loose monetary policy for years to come and, according to speculation, will allow inflation to rise more than previously indicated before raising interest rates. interest.

Wednesday’s Fed move sent the crash to 93.17, the weakest since June 2018. It recovered some of the losses and was the last at 93,398.

The weakness of the dollar supported the euro at $ 1.1792 (). The common currency hit a two-year high of $ 1.1807 and is on track to post its highest monthly gain in 10 years, having increased approximately 5% so far this month.

Sterling also held firm against the dollar at $ 1.2998 , just below Wednesday’s 4½ month high of $ 1.3013.

In commodity markets, oil prices rose after a sharp drop in U.S. crude inventories, but another record-breaking day for coronavirus cases worldwide kept profits under control.

Brent () crude oil futures rose 4 cents to $ 43.79 a barrel. US crude oil futures () rose 1 cent to $ 41.28.

It fell 0.4% to $ 1,962.6 an ounce.