Kevin Buckland
TOKYO (Reuters) – Asian shares fell while the dollar remained firm on Tuesday as investors awaited minutes from the Federal Reserve’s latest meeting to gauge the timing and extent of a possible interest rate cut this year.
Gold retreated from Monday’s record high, although it was lower on concerns that U.S. interest rates will remain high for a long time as Fed officials maintain a cautious view of the recent weakening in inflation.
Cryptocurrencies Ether and Bitcoin rose to new six-week highs amid speculation that the US Securities and Exchange Commission (SEC) could approve a spot Ether exchange-traded fund (ETF).
Markets are currently pricing in about 41 basis points of Fed rate cuts this year, with the quarter-point cut fully priced in for November.
Traders rushed to reinstate easing bets after data earlier this month showed pressure on consumer prices eased in April after a string of three months of surprises at the start of the year.
Even so, Fed officials have been reluctant to say inflation is under control: Vice Chairman Philip Jefferson said Monday it was too early to say whether the slowdown was “prolonged” and Vice Chairman Michael Barr said contractionary policies need more time. .
Minutes from the Fed’s latest meeting, due to take place on Wednesday, could provide valuable insight into the future course of policy, although the discussions preceded a softer reading from the consumer price index last week.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.9% as the index pulled back 1.9% from Monday’s multi-month peak.
Japanese technology companies tracked the Nasdaq index to a record high overnight before turning around to trade 0.1% lower.
Nasdaq futures fell 0.06%. remained unchanged after rising 0.1% on Monday.
“Market sentiment remains relatively resilient, with low implied volatility, supported by greater confidence in U.S. rate cuts this year,” Kyle Rodda, senior markets analyst at Capital.com, wrote in a note.
At the same time, record highs for metals such as gold “are seen as a signal of improving economic activity around the world, and this could be a factor keeping a lid on inflation,” Rodda said.
Gold fell 0.3% to about $2,417 an ounce after hitting $2,450 for the first time overnight.
The dollar held its ground against major currencies, settling at 104.62 after recovering from a five-week low of 104.07 hit on Thursday.
The index was little changed at 4.4433% after rising 1.7 basis points on Monday.
Futures fell 0.7% to $83.17 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 0.7% to $79.22.
Meanwhile, Monday’s stellar performance climbed to new highs as traders snapped up cryptocurrencies following a report that the SEC suddenly asked exchanges that want to trade Ethereum ETFs to update regulations, raising bets that approval could come this week .
rose to $71,957 and Ether jumped to $3,720.80, both reaching levels not seen since April 9.
“Speculation around the Ether ETF certainly played a role in this move, adding fuel to the fire of the crypto bull market that reignited after last week’s cooler U.S. CPI data,” said IG analyst Tony Sycamore.
Sycamore expects Bitcoin to retest its all-time high at $73,803.25 in the coming days before making a push towards $80,000.