Asian stocks rose to their highest since May 2008 on Wednesday, led by sectors most sensitive to the economic growth cycle ahead of US earnings,while the US dollar slid to a two-month low, weighed by traders closing short-term bets against the euro. Goldman Sachs will be a focus later, when the Wall Street bank posts fourth quarter results.
A rally in riskier assets, which has lifted the US S&P 500 stocks index to its highest since September 2008 and pressed on despite the euro zone fiscal crisis, has been fed by hopes that the world’s No.1 economy could return to a sustainable recovery path.
Positive US earnings surprises could also keep the rally alive.
The dollar index , which measures the dollar against a basket of major currencies, fell to a two-month low as short-covering encouraged by talk of Asian central bank buying of the euro pushed the single currency to a one-month high around $1.3475 , with its Dec. 14 high of $1.3500 seen as a major resistance level.
“People are covering euro short positions as Asian sovereign names have been buying the euro on dips in the past few days,” said a trader for a Japanese bank in Tokyo.
As market players remain wary about China’s fight against inflation, Hong Kong media reported that Chinese consumer prices rose 4.6 percent in the year to December, a slowdown from a 5.1 percent pace in November that would alleviate the need for aggressive monetary tightening.