Published: Thu, September 08, 2016
Economy | By Melissa Porter

Asian shares mixed in quiet trading as US takes holiday

The yen kept some distance from a one-month low against the dollar today after Bank of Japan Governor Haruhiko Kuroda held back from signalling further easing, acknowledging instead the costs of the BOJ's aggressive stimulus.

SEOUL, South Korea (AP) - Asian shares were mixed in quiet trading on Tuesday after US markets were closed for the Labor Day holiday. Asian stocks rose Monday as a report set off hopes among traders that the Federal Reserve will wait before raising int. "But given many market players think its next rate cut will come in November at the earliest - after the next CPI data anyway - the impact may not be so large, mostly driven by algo-type trading", said Yukio Ishizuki, currency strategist at Daiwa Securities.

Richmond Federal Reserve Bank President Jeffrey Lacker said on Friday that the USA economy appears strong enough to warrant significantly higher interest rates.

The Canadian dollar weakened against its US rival Wednesday after the Bank of Canada left its benchmark interest rate steady at 0.5%.

BNY Mellon senior global markets strategist Marvin Loh expects the Fed to hold off on any rate hikes until December, when they can factor in three additional jobs reports as well as the US third-quarter growth report.

Chinese President Xi Jinping said at the opening of the summit on Sunday that global economy was being threatened by rising protectionism and risks from highly leveraged financial markets.

In Tokyo the dollar bought 103.47 yen, against 103.44 yen Monday, but well down from the levels close to 104 yen seen at the end of last week.

The Bank of Japan is split on whether to add stimulus at its September 20-21 policy meeting, where central bank Governor Haruhiko Kuroda has said the board will conduct a comprehensive assessment of the effects of its massive stimulus program.

The BOJ will refrain from accelerating money printing or deepening negative rates this month as improvements in the economy make it hard to justify again deploying "bazooka"-like big stimulus, Kazuo Momma, who oversaw the bank's monetary policy drafting and global affairs until May, told Reuters on Tuesday".

With three years of money printing having failed to lift inflation, the BOJ may modify its policy target to one better suited for a long-term battle against deflation, he said.

Japan's economy hasn't deteriorated much since the July easing and the government's fiscal spending package will start to boost growth, offering few reasons to expand monetary stimulus now, he said.

The fall was unexpected as the initial estimate for August was 53.3 and has stoked speculation that the European Central Bank will enact a further stimulus on Thursday at its regular policy meeting.

Most economists expect the central bank to hold policy steady, although some believe the ECB could extend its asset buying programme.

The Reserve Bank of Australia will also issue a policy decision on Tuesday. Brent crude, the benchmark for worldwide oil prices, rose 21 cents to $47.84 a barrel. Benchmark U.S. crude oil gained 88 cents to $45.32 a barrel in electronic trading on the New York Mercantile Exchange.

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