The dollar index slipped 0.07% to 100.84, after a 0.3% rally on Tuesday
The dollar ceded some of its overnight gains on Wednesday while Asian stocks were mixed as traders weighed the odds of a super-sized Fed interest rate cut later in the day.
The U.S. currency dropped back sharply against the yen, handing back a third of its rally from Tuesday, when unexpectedly strong U.S. retail sales data was taken as weakening the case for aggressive Fed easing.
The euro also gained, recovering almost all of the previous day’s decline.
The chances of the Federal Reserve starting its easing cycle with a super-sized cut of 50 bps oscillated in Asia, pulling back to 63% early in the day from 67% around the same time on Tuesday, as per LSEG data. However, as of 0137 GMT, the odds were back at 65%.
Japanese shares sole gainers in Asia, with the Nikkei stock average jumping 0.72% to erase Tuesday’s 1% decline, as the benchmark index continued to be influenced by the dollar-yen exchange rate.
Mainland Chinese blue chips opened flat after coming back online following a holiday-extended weekend, and Taiwan also returned from a day off to trade 0.35% weaker. Australia’s benchmark was little changed.
MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.05%.
Hong Kong and South Korea were among markets shut for holidays.
Wall Street closed nearly unchanged on Tuesday, failing to sustain early momentum that pushed the S&P 500 and Dow to record intraday highs. S&P 500 futures pointed 0.08% higher on Wednesday.
The U.S. price action conveys the significant inflection point markets confront, according to Kyle Rodda, senior financial market analyst at Capital.com.
The dollar declined 0.55% to 141.60 yen, although that followed a 1.26% jump overnight.
The euro gained 0.12% to $1.1128.
The dollar index slipped 0.07% to 100.84, after a 0.3% rally on Tuesday.
Short-term Treasury yields continued to gain though, with that on the two-year note adding another basis point to sit at 3.6028% in Asian time.
