Dollar faces fresh pressure, most Asia markets edge up

A man walks past a stock quotation board flashing the Nikkei 225 key index of the Tokyo Stock Exchange in front of a securities company in Tokyo on Jul 24, 2017. (Photo: AFP/Toru Yamanaka)

But uncertainty surrounding Donald Trump's presidency continues to drag on sentiment, with Wall Street's three main indexes ending last week on a negative note.

The single currency extended last week's rally against the greenback after European Central Bank boss Mario Draghi said policymakers would address its vast stimulus programme by the autumn, fuelling speculation they would start winding it in.

In afternoon trade Monday the euro bought US$1.1668, around two-year highs, with analysts predicting it could break above the US$1.1714 mark set in mid-2015.

The dollar was also well down against the yen and pound. The unit has struggled as Trump's travails - from a probe into his election campaign's links to Russia to failure to push through health care reforms - dampen expectations he will be able to pass his much-vaunted economic agenda.

"Factoring in the expanding US political sinkhole, which is weighing on broader (dollar) sentiment, it's unlikely the market has run out of steam," Stephen Innes, head of Asia-Pacific trading at OANDA, said in a note.

Traders will be watching the Fed's latest policy meeting, which ends on Wednesday, hoping for some guidance on its plans for raising interest rates. Expectations for further increases have been tempered in recent weeks as inflation remains tepid and Trump's woes grow.

On equities markets, Tokyo's Nikkei index ended down 0.6 per cent as exporters were hit by the strong yen, while Sydney also shed 0.6 per cent and Singapore was 0.1 per cent off.

However, other markets managed to recover early losses, with Seoul 0.1 per cent up, while Taipei and Wellington were each 0.2 per cent higher.

There were also gains in Bangkok and Jakarta.

Hong Kong was up 0.5 per cent - having risen for nine of the previous 10 trading days. Shanghai finished 0.4 per cent higher.

Michael McCarthy, chief market strategist at CMC Markets, said: "Japan and the US releases could dominate market thinking. National account components, housing, inflation and consumer related data all drop this week.

"These releases will occur alongside the busiest week of the US corporate reporting season so far and an interest rate decision from the US Federal Reserve.

"This snapshot of two major economies leads into (factory activity) data from China the following week. The outlook for markets may change considerably, especially if recent US economic weakness persists."

In early European trade London lost 0.2 per cent, Frankfurt shed 0.1 per cent and Paris rose 0.3 per cent.

- Key figures around 0820 GMT -

Tokyo - Nikkei 225: DOWN 0.6 per cent at 19,975.67 (close)

Hong Kong - Hang Seng: UP 0.5 per cent at 26,846.83 (close)

Shanghai - Composite: UP 0.4 per cent at 3,250.60 (close)

London - FTSE 100: DOWN 0.2 per cent at 7,438.04

Euro/dollar: UP at US$1.1668 from US$1.1666 at 2030 GMT Friday

Pound/dollar: UP at US$1.3000 from US$1.2994

Dollar/yen: DOWN at ¥110.88 from ¥111.13

Oil - West Texas Intermediate: UP one cent at US$45.78 per barrel

Oil - Brent North Sea: UP five cents at US$48.11

New York - DOW: DOWN 0.3 per cent at 21,580.07 (close)