AFP - The euro tumbled against the dollar yesterday as dealers bet on fresh stimulus from the European Central Bank later in the day, while most Asian stock markets fell following the previous day’s gains.
Asian energy firms tracked losses in their US counterparts as a supply glut and strong dollar weigh on oil prices ahead of a key meeting of the OPEC oil cartel.
The greenback rallied Wednesday in New York after Federal Reserve boss Janet Yellen said she considered the US economy strong enough to withstand an interest rate rise.
Her comments virtually assure a hike at its next policy meeting this month following a slew of mostly strong data. The dollar jumped against the yen and euro in US trade.
While the dollar eased against the yen in Tokyo, it extended gains against the European single currency as the ECB prepares to loosen its hold on monetary policy and is now at levels not seen for more than seven months.
Some analysts predict the greenback to reach parity with the euro in the new year.
“There’s a lot of anticipation of ECB easing and it seems to be pretty much the consensus that it will happen,” Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors, said.
“The US economy has had the training wheels support of ultra-easing monetary policy, and suddenly they’re being told by their parent -- the Fed -- it’s time to take them off. Naturally, the markets, like the child, are feeling nervous.”
Oil prices plunged Wednesday after official figures out of Washington showed another sharp rise in US stockpiles and production, suggesting demand remains sluggish.
US benchmark West Texas Intermediate sank 4.6 percent -- falling below $40 a barrel for the first time since August -- and Brent North Sea crude dived 4.4 percent. The news hit big-name energy giant including ExxonMobil and Chevron, which were the Dow’s biggest losers. And despite a one percent lift in oil prices Thursday, most Asia energy firms and miners turned negative.
Sydney-listed BHP Billiton, the world’s biggest miner, fell three percent, Woodside Petroleum dropped 3.8 percent and Origin was 1.8 percent off.
In Hong Kong, PetroChina lost 0.5 percent but CNOOC rebounded in the afternoon to close 0.8 percent higher.
Hong Kong’s Hang Seng Index shed 0.3 percent, Sydney gave up 0.6 percent and Seoul was 0.8 percent lower.
However, Shanghai stocks jumped 1.4 percent, a fourth-straight gain after diving Friday 5.5 percent on news that some of China’s top brokerages were being probed in the wake of a summer market rout. The index has now recovered almost all of last week’s losses.
Tokyo recovered slightly from morning selling to end flat. The losses on stock markets have been “magnified by the fall in the oil price, which was a reflection of nervousness ahead of the OPEC meeting”, Capital Investors’ Oliver told Bloomberg News.
The Organization of the Petroleum Exporting Countries is due to meet at its Vienna headquarters Friday but analysts do not expect it to announce any reduction in output. Oil prices have slumped from about $115 a barrel in the summer of 2014 to their present levels owing to record production levels, a slowdown in the global economy and a stronger dollar.
“I’m not happy with the oil prices,” Iraq’s oil minister Adil Abd Al-Mahdi told reporters in the Austrian capital, cautioning however that no agreement had been reached on production. “We will wait and see,” he added.
In early European trade London dipped 0.1 percent, Frankfurt slid 0.2 percent and Paris shed 0.2 percent.