Yen Extends Gains as Stock Rally Fades After Fed

• Yen Extends Gains as Stock Rally Fades After Fed

The yen extended gains and a stock rally fizzled as traders in Asia digested minutes from the Federal Reserve’s December meeting. Crude oil maintained an advance.

Japan’s currency rose 0.5 percent against the dollar and the Bloomberg Dollar Index retreated for a second day. Equity indexes in Japan swung between gains and losses, while Australian shares advanced and South Korea’s Kospi index dropped. The S&P 500 Index rose a second day overnight and the greenback fell as the Fed minutes highlighted concerns about the impact of a strong currency on the new U.S. administration’s stimulatory economic policies.

Uncertainty over the path of U.S. fiscal policy weighed heavily on the Fed’s discussion of the economy and the path of monetary policy when it decided to lift rates last month, minutes from that meeting showed. Despite growing attention to the risks of fiscal policy spurring faster growth than currently forecast, most on the committee reiterated that a “gradual” pace of rate hikes over the coming years would likely remain appropriate. Stocks have rallied with the dollar, while Treasuries have plunged since Trump’s election.

“Stop-loss orders were probably taken out after dollar-yen broke 117,” said Shigeki Yoshitoshi, head of Japan foreign-exchange and commodities sales at Australia & New Zealand Bank Group Ltd. in Tokyo. “Along with the caution about a strong dollar in the FOMC minutes, the tone wasn’t as hawkish as I expected.”

Stocks

• The MSCI Asia Pacific Index rose 0.6 percent as of 10 a.m. in Tokyo. The Topix index added 0.1 percent and Australia’s S&P/ASX 200 Index advanced 0.3 percent. South Korea’s Kospi index slid 0.1 percent and New Zealand’s S&P/NZX 50 Index lost 0.2 percent.
• Futures on the S&P 500 fell 0.1 percent after the underlying gauge rose 0.6 percent in New York. The Dow Jones Industrial Average resumed its pursuit of 20,000, rising to 19,942.16.
• The Stoxx Europe 600 Index fell 0.1 percent to halt a three-day advance that took the measure into a bull market.

Currencies

• The Bloomberg Dollar Index extended losses, declining 0.3 percent, after touching its highest level since its 2004 inception on Wednesday. The measure has jumped 1.7 percent since Dec. 13.
• The yen rose 0.5 percent to 116.66 per dollar after rising 0.4 percent the previous session. South Korea’s won jumped 1.2 percent, the most since September.
• The euro climbed 0.4 percent to $1.0533 after jumping 0.8 percent in its first gain against the dollar this year, after the region’s inflation accelerated in December to the fastest pace since 2013.

Commodities

• Crude oil futures were little changed after Wednesday’s 1.8 percent advance. U.S. crude inventories were projected to have declined while OPEC and other producers implement promised production cuts.
• Gold rose 0.7 percent in early trading.