Dollar up in Asia as stock markets rally

TOKYO- The dollar strengthened against the euro and yen in Asia on Monday, in line with a regional equities rally after a surge on Wall Street at the end of last week.

In Tokyo afternoon trading, the greenback bought 107.33 yen against 106.78 yen in New York, and sharply higher than the 106.22 yen earlier Friday in Asia.

The euro was at $1.2756 compared with $1.2759 in US trade while it rose to 136.91 yen from 136.28 yen.

The gains cheered investors after increasing worries about the global economy last week saw them rushing into safe investments such as the yen.

US and European markets jumped on Friday after dovish comments from officials at the US Federal Reserve and Bank of England.

On Thursday, James Bullard, head of the St Louis branch of the Federal Reserve, suggested the Fed could extend its bond-buying programme rather than winding it down, as had been expected.

And on Friday, Bank of England chief economist Andrew Haldane said recent economic weakness implied the need for a slower approach to raising rates.

The two banks have been considering hiking interest rates in the past few months as their respective economies have slowly been picking up. However that has spooked traders as other economies, including the eurozone, China and Japan, have been struggling.

Japanese shares were up 3.70 percent in late trade Monday, with buying also helped by a report in the leading Nikkei business daily that the national pension fund, the world’s largest, is working out plans to boost its domestic stock holdings.

However, Credit Agricole said in a note “it is probably too early to conclude that we are back into the time of steady and healthy risk appetite”.

It added: “Uncertainty surrounding the Fed remains ahead of the (policy board) meeting next week, while growth concern continues to be theme in Europe” as a likely fall in September’s preliminary manufacturing activity index indicates.

“High volatility will likely remain the story for now,” it said.

Investors are keeping an eye on the release Tuesday of third-quarter Chinese economic growth data, with expectations for another weak reading following a recent string of underwhelming indicators.